Thank everyone . I first posted on this about 8 years ago when I was planning on purchasing a place on Third street (hence the username). Its been very helpful since then

Security deposit would/should be included in the HUD at closing and transferred to new owner.

Robin.

A bit unrelated, but it may be helpful.

This is the go-to guide for tenant and landlord rights in New Jersey:

http://www.lsnjlaw.org/publications/p ... manuals/tenantsrights.pdf

Also, if you're inheriting tenants, do a bit of due diligence. Ask for proof of the last 12 months of payments to make sure they pay on time. Maybe request a background check - at the expense of the seller. Check out the apartment from top to bottom and ask the renter to discuss any concerns/areas that need repair.

It's great to have ready income at closing, but it's also best to know who is going to be living in your home - especially if you're living there, too.

From experience, when the property changes hand the new landlord inherits the tenant contract and responsibilities as well as the security deposit. Your lawyer will/should take care of the latter. If your tenants are on a month-to-month due to the fact that their previous lease expired, you can decide to propose a new lease or keep it as month-to-month with the implication that you can adjust the rent anytime on a 30 days-notice. If the previous owner highly recommend the tenants, it may be wise to make sure they stay except if you have work plans in mind for their unit. Nothing better than building trust and stability at first...

I can only answer to the security deposit. When the building we rent in was recently sold, our security deposit did change hands between the old owner and the new owner.

Anyone here know what are things I need to do and make sure are in the contract when buying a place with existing tenants?

Also what happens to the security deposit? Is the previous owner supposed to turn it over to me at the time of sale.

Thanks in advance