Commercial Real Estate Investment/Tenant Security Deposit

Advertisement

Expert: - 10/20/2008


Question
Hello, and thank you for taking the time to help with my question.
I was wondering if I put down a security deposit when I rented a retail space and the landlord lost the property back to the bank a couple years later while I was still a tenant. Are they still liable for the security deposit?  The bank told me they did not get any security deposit from the owner when they took back the property back from him.

Thanks for all your help.

Cory

Answer
Cory-

I do not know the answer to your question; however it presents an interesting situation.

The bank took over the property where you have your retail space and I assume they have accepted the terms of your lease - or they would have asked you to move-out when they took control of the property. If they did not provide you with a new lease at that time, and they have honored the terms of your lease for the last few years, it seems unfair for them to say that they do not recognize the fact that you had posted a security deposit with the landlord.

Check your lease text, many leases actually stipulate if the bank or other new owner of the property is responsible for your security deposit if in fact the original owner does not transfer the deposit funds to the successor interest in the property.

In your next lease, specify that the landlord must return the security deposit to you upon transfer of the property and that the landlord remains liable for the deposit amount if it fails to return the security deposit to you.

-Jim

Commercial Real Estate Investment

All Answers

Answers by Expert:

Ask Experts

Volunteer

Jim Avancena, CPM

Expertise

Best qualified to answer questions that involve commercial leases, that is, basic issues as well as the often unexpected effects of the complexities and inter-relationships of the provisions a lease may contain, explain how seemingly innocuous text in your lease can have a major impact on a Tenant or Landlord and their business operations, and the common practices utilized in the industry. I can untangle most matters that may come up from the time a tenant begins searching for a office or store space and the lease acquisition process, concerns related to remodeling/improving the leased premises, moving-in, subletting or assigning the leased space, and a long list of problems that may come up during the lease term and even after a tenant moves out. I have practical experience with most property management issues and resolving landlord and tenant disputes - especially those involving what may appear to be overcharges assessed for additional lease charges like CAM costs, operating expense reimbursement, real estate taxes, utilities, construction improvements etc. Note that I am not an attorney and cannot provide legal advice.

Experience

Thirty years active experience in the commercial real estate industry as a licensed real estate broker in the Washington DC Metro area (DC, Northern Virginia & Maryland). I have been admitted (approved) by the Maryland and DC courts to testify as an expert witness on the subjects of Commercial Leasing and Property Management in the area of standard industry practices. I have had a business for the last 14 years advising virtually every form of business entity from large national corporations to the smallest ma & pa new businesses regarding a wide range of commercial real estate matters in addition to property management and commercial leasing.

Organizations
Currently my three children keep me so busy that it is difficult to participate in organizations with continuing and specific time requirements.

Publications
I publish a local commercial real estate newsletter titled: "Tenants First". My firm was the subject of a high profile Washington Post business section cover page (2.25 full pages) feature story on January 13, 1993; titled "Overcharging Overhead".

Education/Credentials
BA in Political Science from Memphis University, and five years of study in the real estate development summer program at MIT. I was certified as a commercial property manager (CPM-IREM), and currently hold a brokers license in Maryland and the District of Columbia.

Awards and Honors
The same plaques and honors that most others in my industry have earned. I have none that I consider especially meaningful.

Past/Present Clients
Past clients include: The World Bank, George Washington University, National Association of Criminal Defense Attorneys, US Department of Commerce, The American Benefits Council, K-Mart Development, many law firms, a national union, other major organizations, and many, many small business firms and retail operators that I am most honored to serve. I estimate more than 1,500 firms/organizations.

©2012 About.com, a part of The New York Times Company. All rights reserved.