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When buying a business, Assignment of remainder lease, do you have to return the tenants deposit during Escrow

Landlord is asking us to put total security deposit of $18,000 but they are transferring $8000 from the previous tenant so we have to come up with another $10,000. Broker for the seller is telling me I have to give the seller his $8000 security deposit back even though it's an assignment of Lease and there is still 3 years left on the current lease they signed. Is this true or current tenant (seller) should forfeit his deposit?

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We are financial consultants to a group of investors whom we have their consent to manage their funds which is in our custody for cooperation in joint venture business investments.

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Jun 6, 2017
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what if this is not disclose in the purchase agreement?

May 5, 2010
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AA Business Sales
CA

Dear Julie,
As far as I know, your broker is correct. Typically buyer reimburses the seller thru escrow. (I do disclose this to buyers in my purchase agreement)
The way it works is like this: the security deposit always stays with landlord and buyer pays to seller in the escrow then when you decide to sell and do a lease assignment your buyer will pay you thru the escrow.
Unfortunately some landlord's are increasing the deposit because of the economy they fear that tenant may not pay rent or if buyer is not highly qualified by their standards.

May 5, 2010

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