Security Deposit Transfer Agreement: Guide for Landlords and Tenants

Introduction

Key Things to Know

1. 1

   Security deposit laws vary significantly by state and sometimes by city, so the transfer agreement should be tailored to comply with local regulations.

2. 2

   The agreement doesn't change the terms of existing leases - the new owner must honor the original lease terms regarding security deposits.

3. 3

   Both buyers and sellers should keep copies of the agreement and related documentation for at least the duration of existing leases plus any statute of limitations for potential claims.

4. 4

   Security deposits must typically be transferred at closing, along with accurate accounting records for each deposit.

5. 5

   Some jurisdictions require security deposits to be held in separate interest-bearing accounts, and this obligation transfers to the new owner.

6. 6

   The agreement should specify how any pending deposit disputes or claims will be handled between buyer and seller.

7. 7

   Tenants retain all rights to their security deposits regardless of property ownership changes.

8. 8

   Failure to properly transfer security deposits can result in penalties, including potential damages beyond the original deposit amounts in some jurisdictions.

New Hampshire Requirements for Security Deposit Transfer Agreement

• Security Deposit Transfer Requirement (NH RSA 540-A:6(II)(d))

  When selling rental property, the seller must transfer all security deposits to the purchaser at the time of transfer. The purchaser becomes responsible for maintaining these deposits and returning them to tenants.

• Written Notice to Tenants (NH RSA 540-A:6(II)(e))

  The new owner must provide written notice to tenants within 5 days of the property transfer, informing them of the transfer of their security deposits and providing contact information for the new owner.

• Security Deposit Amount Limitations (NH RSA 540-A:6(I))

  Security deposits in New Hampshire cannot exceed one month's rent or $100, whichever is greater. The agreement must ensure transferred deposits comply with this limitation.

• Interest Payment Requirements (NH RSA 540-A:6(IV)(a))

  For tenancies exceeding one year, landlords must pay interest on security deposits at a rate equal to the interest rate paid on regular savings accounts at the financial institution where the deposit is held.

• Separate Account Requirement (NH RSA 540-A:6(II)(a))

  Security deposits must be held in a separate account that is not commingled with the landlord's personal funds. The agreement must specify how this requirement will be maintained during transfer.

• Receipt Provision (NH RSA 540-A:6(II)(b))

  The new owner assumes responsibility for providing tenants with a receipt that includes the name and location of the bank where the security deposit is held and the account number.

• Deposit Return Timeline (NH RSA 540-A:7(I))

  The new owner assumes responsibility for returning security deposits within 30 days after the termination of tenancy, less any lawful deductions.

• Itemized List of Damages (NH RSA 540-A:7(II))

  The new owner assumes responsibility for providing an itemized list of damages and repair costs if any portion of the security deposit is withheld.

• Penalties for Noncompliance (NH RSA 540-A:8)

  The agreement should acknowledge that failure to comply with security deposit laws may result in the landlord being liable for double the amount of the security deposit plus reasonable attorney's fees.

• Escrow Account Documentation (NH RSA 540-A:6(II)(a))

  The agreement must include documentation of the escrow account transfer, including account numbers and financial institution information.

• Liability Transfer Provision (NH RSA 540-A:6(II)(d))

  The agreement must clearly state that the purchaser assumes all liability for the security deposits transferred, including any claims by tenants that arose before the transfer.

• Fair Housing Act Compliance (42 U.S.C. § 3601-3619)

  The agreement must acknowledge compliance with the Fair Housing Act, which prohibits discrimination in housing based on race, color, national origin, religion, sex, familial status, and disability.

• Truth in Lending Act Compliance (15 U.S.C. § 1601 et seq.)

  If the property transfer involves seller financing, the agreement must comply with Truth in Lending Act disclosure requirements.

• Lead-Based Paint Disclosure (42 U.S.C. § 4852d; 40 CFR Part 745)

  For properties built before 1978, the agreement must address the transfer of lead-based paint disclosure records and ongoing compliance obligations.

• Servicemembers Civil Relief Act (50 U.S.C. § 3901-4043)

  The agreement must acknowledge that security deposits for active military tenants are subject to additional protections under the SCRA.

• Indemnification Clause (NH Common Law; Contract Law Principles)

  The seller must indemnify the buyer for any claims related to security deposits that arose prior to the transfer date but were not properly disclosed.

• Record Keeping Requirements (NH RSA 540-A:6(II))

  The agreement must address the transfer of all tenant records, including original lease agreements, security deposit receipts, and correspondence regarding the condition of the rental units.

• Property Condition Documentation (NH Common Law; Best Practices)

  The agreement should include the transfer of property condition documentation related to security deposits, such as move-in inspection reports that may be relevant to future deposit disputes.

• Dispute Resolution Process (NH Common Law; Contract Law Principles)

  The agreement should establish a process for resolving disputes between seller and buyer regarding security deposit liabilities that arise after the transfer.

• Compliance with Local Ordinances (NH RSA 47:17; Municipal Regulations)

  The agreement must acknowledge compliance with any local municipal ordinances that may impose additional requirements on security deposit handling beyond state law.