California Real Estate Practice Exam

Upon the sale of a residential rental property, the security deposit can either be transferred to the new owner or returned to the tenant. This option allows for a smooth transition between owners and ensures that the tenant's security deposit is properly handled. Refunding the security deposit to the landlord (option A) would be incorrect and could be seen as a breach of trust towards the tenant. Using the security deposit for property repairs (option C) is also incorrect as it is meant to be a refundable amount held for potential damages caused by the tenant. Holding the deposit until the end of the lease term (option D) is not necessary and could cause issues if the tenant decides to move out before the lease ends.