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Seller wants payment for Security Deposit for Retail Lease Assignment

I am in the middle of a business purchase, I will be taking over the existing lease via a lease assignment. 2 weeks before closing the seller is asking me to pay them for the security deposit that the landlord will credit me. Is this a typical practice? I had assumed that the "lease" was an asset that I was purchasing as part of the transaction and it included the security deposit? The security deposit is 5% of the purchase price.

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Answers (5)
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Signal Hill Holdings, LLC
General Partner
CT

Not a lawyer either, but from my experience yes it is typical. The deposit is the lessee's asset that is held by the landlord. If the seller is no longer the lessee, then he would not have any claim on the deposit. Thus the new lessee would need to make that deposit to the appropriate party. However, what isn't typical is that the landlord would be unaware of the assignment or the transaction, as they usually would need to approve the new lessee.

Dec 14, 2015
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e10 Consulting LLC
Miami-Dade County, FL

In cases such as this, you are better off to negotiate a new lease agreement with the landlord to protect yourself. Any security deposits should also be paid to the landlord. Please consult with an attorney.

e10 Consulting LLC

Nov 21, 2015
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The BAF Group LLC
MD

I am not an attorney, but unless the deposit is specifically mentioned in the Contract, I would say the deposit should not convey as part of the sale. This is the way we see it done most of the time. This is also the reason you need an attorney to finalize the terms.

Oct 31, 2015
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Personal
Owner
VA

The initial letter of intent was a boiler plate that did not state this clearly. It does say that all assets of the business tangible and intangible are included in the purchase.

Oct 31, 2015
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The BAF Group LLC
MD

Whatcare the written terms of the contract?

Oct 31, 2015

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