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Deposits · State comparisonTenant security deposits when selling a rental: the rules in fourteen states

When a tenant-occupied home is sold, the tenants' security deposits don't stay behind with the seller – but states handle them differently. Some set a transfer procedure: Florida requires all deposits and advance rent, with interest and an accounting, to be transferred to the new owner (Fla. Stat. §83.49(7)); Washington moves the trust account to the successor's equivalent account at the same time (RCW 59.18.270); Connecticut makes the seller withdraw the deposits from escrow and deliver them with interest to the successor (Conn. Gen. Stat. §47a-21(h)(3)); Minnesota gives the seller 60 days to transfer them with interest or refund them (Minn. Stat. §504B.178, subd. 5), and Iowa a reasonable time to transfer them with notice to the tenant or refund them (Iowa Code §562A.12(5)); Maine requires the accounting and transfer no later than at the closing (14 M.R.S. §6035); North Dakota transfers the deposits with interest to the buyer, the seller staying liable until it does (N.D. Cent. Code §47-16-07.1(5)). Others put the liability on whoever owns the property: in Texas the new owner is liable from the date it takes title and gives each tenant a signed statement of the amount (Tex. Prop. Code §92.105); in Arizona, Virginia, Utah and Kansas the owner at the end of the tenancy is bound, whether or not the deposit was handed over (A.R.S. §33-1321(H); Va. Code §55.1-1226(E); Utah Code §57-17-4; K.S.A. 58-2550(f)); in Pennsylvania a buyer takes on the seller's landlord duties (Landlord and Tenant Act §104). South Carolina keeps the seller liable unless the deposit is transferred and the tenant notified in writing (S.C. Code §27-40-450). Either way, the deposits are something to account for in the contract and at closing.

States with a transfer procedure

  1. Florida (§83.49(7))

    Transfer deposits, advance rent, interest and an accounting to the buyer.

  2. Washington (RCW 59.18.270)

    Trust account moves to the successor; tenants notified.

  3. Connecticut (§47a-21(h)(3))

    Deliver deposits plus interest; 30-day notice to tenants.

  4. Minnesota (§504B.178)

    Transfer or refund within 60 days; 20-day objection window.

  5. Iowa (§562A.12)

    Transfer with notice or refund; 20-day objection window.

  6. Maine (14 M.R.S. §6035)

    Accounting and transfer at the latest at closing; tenants notified.

  7. North Dakota (§47-16-07.1(5))

    Deposits plus interest to the buyer; seller liable until then.

  8. South Carolina (§27-40-450)

    Transfer and notify, or the seller stays liable.

States that make the owner liable

  1. Texas (§92.105)

    New owner liable from title; signed statement to each tenant.

  2. Arizona (§33-1321(H))

    Owner at the end of the tenancy is bound.

  3. Virginia (§55.1-1226(E))

    Owner at the end returns it, transferred or not; notice of sale.

  4. Utah (§57-17-4)

    Owner at the end of the tenancy is bound.

  5. Kansas (K.S.A. 58-2550(f))

    Owner at the end of the tenancy is bound.

  6. Pennsylvania (§104)

    Buyer takes on the seller's landlord duties.

Questions about deposits on a sale

Does the buyer of a rental owe the tenants' deposits?

In most of these states, yes – either by statute once title passes (Texas) or because the owner at the end of the tenancy is bound (Arizona, Virginia, Utah). In South Carolina the seller stays liable unless the deposit is transferred and the tenant notified.

Which states require the seller to transfer deposits to the buyer?

Florida, Washington and Connecticut set a transfer procedure; Minnesota lets the seller transfer or refund within 60 days.

Do tenants have to be told about the sale?

Several states require notice – for example Texas (signed statement), Connecticut (30 days), Washington (promptly), Virginia (purchaser's contact details) and South Carolina (to shift liability).

The state guides

Answer "Tenants stay" on the deal in ClosingCode and it adds the rent roll and deposit accounting document with the state's rule, the deposit-transfer step before closing and the tenant-notice step after.

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Sources: Tex. Prop. Code §92.105; Fla. Stat. §83.49(7); A.R.S. §33-1321(H); RCW 59.18.270; Minn. Stat. §504B.178; Va. Code §§55.1-1216, 55.1-1226; S.C. Code §27-40-450; Pennsylvania Landlord and Tenant Act of 1951 §104; Conn. Gen. Stat. §47a-21; Utah Code §57-17-4; Iowa Code §562A.12; 14 M.R.S. §6035; N.D. Cent. Code §47-16-07.1; K.S.A. 58-2550 (official state sites, read for the linked guides).

General information, not legal advice. Each state links to the guide with the details. ClosingCode is software; it is not a law firm. This guide is not a substitute for the advice or services of an attorney.