Short answer
Treat the deposit as the tenant's money. Section 5514 caps deposits at one month's rent for agreements of a year or more and requires an itemized list of damages within 20 days after the rental agreement ends. A landlord who wrongfully withholds can owe double. Settle where the deposit goes before closing.
The rules on the deposit
Section 5514 of Title 25 says a landlord may not require a security deposit above one month's rent when the rental agreement is for a year or more. Pet deposits are similarly limited. Within 20 days after the rental agreement ends, the landlord must give the tenant an itemized list of damages, and a landlord who wrongfully withholds can owe double the amount withheld.
The sale changes who holds the money
The chapter text we reviewed did not spell out how a deposit passes to a new owner, so do not assume. Raise it in the contract. Typical choices are a credit to the buyer at closing or a transfer of the funds with a written statement for the tenant. Get an attorney to draft the clause, and give the tenant written notice of who holds the deposit.
Keep records
Keep the lease, move-in condition report, receipts and photos. Those records matter if the tenant later disputes deductions, and the buyer will want them. A signed estoppel statement from the tenant listing the rent, the deposit and any claims can reduce arguments after closing.
Related reading
Delaware law also limits entry and notice. See our guide on showing a rental to buyers. This page is general information and not legal advice. A Delaware landlord-tenant attorney can confirm how the deposit should move in your sale.
Selling for cash instead
A landlord who wants a tidy exit may like a buyer who closes without dealing with tenant turnover. Kaizen Home Buyers buys houses for cash, as-is, with no repairs and no agent commission. We can make an offer within 24 hours and close in 14 to 30 days, or on the date you choose. Call 267-329-0084.