Tenant paid no security deposit to previous LL. Is this good investment for prospective buyer?

A buyer decide to purchase a income producing ,single tenant, NNN property at good location and finds out that no security deposit has been paid by tenants to the LL and it is fine by the LL. Is this a common practice in commercial leasing? What happens if tenant defaults or damages property? What is your opinion, should the buyer move ahead with the purchase or look for something else or this is not a big issue?
Thank you
In Buying Property - Asked by Rashida N. - Mar 4, 2009
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William G.
Scottsdale, AZ

Rashida, this is not common normal situations vary from market to market but a security deposit is a must on any nnn lease situation from the LL point of view. The fact that they have no records of deposits being paid may be one of two things either they collected security deposits and cannot account for them or worse they have no deposits in which case your buyer may be stuck with major expenses for evictions and or unit repairs on expired leases. If the NNN tenants are major players, Public Companies or government agencies you can recover damages based on lease provisions in court, if they are small companies find another opportunity, there are plenty to choose from.

Mar 5, 2009
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Gregory G.
San Francisco, CA

Who is the tenant?

Mar 9, 2009
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Tai L.
San Diego, CA

Maybe there's some relationship in place...who knows.

May 22, 2009
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