You are closing an escrow at the end of the month on a 4-plex. Each unit has a security deposit held by the landlord. Which of the following is True?

In the context of closing an escrow for a 4-plex, security deposits held by the landlord are important because they represent funds that the landlord must return to tenants upon the termination of their leases. When a property is sold, these security deposits typically need to be accounted for in the closing statement.

Debiting the seller $800 indicates that the seller is being charged for the security deposits that they hold. Since the buyer will assume the landlord's responsibilities, including returning the security deposits to tenants at the end of their leases, it is appropriate to debit the seller for the total amount of the security deposits being transferred as part of the sale.

In this case, if there are four units with each unit's security deposit totaling $200 (which sums to $800), the seller is debited this amount because, at the closing, these funds belong to the tenants and must be handled appropriately. The buyer would not be charged directly for these deposits until they are returned to the tenants in the future.

This accounting also helps ensure that the buyer is not financially responsible for funds they haven't yet received and have not been in their possession. Therefore, debiting the seller for the security deposits is aligned with proper escrow and real estate transaction handling.