What Is "Seller Rent-Back"?

By
Real Estate Agent with eXp Realty 331610

In home purchase transactions, there are many times when the buyer and the seller are simply unable to agree upon a specified closing date. The Real Estate Agent involved can negotiate a 'rent back' period that is agreeable to both parties. This means the transaction technically closes, the loan for mortgage financing is funded, and ownershiRita Legan ASP Staging Realtor 440-227-4461p of the property is transferred into the buyer's name. However, the buyer does not take occupancy of the property until several days later. Instead, the buyer sets up a rental agreement in which the property is leased back to the seller for a temporary period that everyone has agreed upon.


While this strategy is fairly common, it is important to make sure the seller is not occupying the property in a lease agreement for more than 30 days* after the close of the purchase transaction. This would constitute a big problem for the new homeowner. After 30 days, the lender would view this as a non-owner occupied purchase, and it would cause the terms of the loan to change radically.


*This requirement can vary depending upon the lender. Always verify that the timeframe is permissible prior to drafting such an agreement.

This article thanks to Don Jareki of Heritage Mortgage

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Best Regards,
Rita Legan ASP Staging Realtor CDPE
Call or Text 440-227-4461
or meet me on the web at
 
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