When a seller needs more time to vacate a home they have sold to a buyer, they sometimes do what we call a rent back.
After the buyer has purchased the home and had the settlement, they legally own the home. If the seller is to stay after the settlement date, the seller usually pays rent to the new owners for the time they stay after the home changes hands.
Just like a rental transaction, a lease will be executed between the buyers and their new tenant, the seller. The lease is usually for no more than a month. The amount of rent is calculated by divinding the buyer's monthly mortgage payment by 30 times the number of days the seller is renting back the house. Seller is still responsible for the utilities while they are still living in the home. A security deposit is held by a third party. This deposit is released back to the seller when the seller has vacated, if the property passes a final walkthru inspection by the buyer (new owner).
A rent back can be a life-saver for a seller who is buying another home and the settlement on that other home can't occur until the sellers current home is sold and settled. This gives a seller some breathing room to make a move just once.
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA
Debbie, this is beneficial to the seller, if the buyer has no need to move right away. Good answer!
Jun 08, 2012 10:26 PM
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!
One months okay, but keep in mind if the buyer has acquired a mortgage where the property will be their primary residence they have executed documents certifyinng that they will occupy the property within 30 days of closing.
the mortgage police will probably not show up on the 31st day, however, we've seen a lot of strange occurances over the past few years
Jun 08, 2012 10:57 PM
Associate Broker at Berkshire Hathaway Home Services Georgia Properties - Jasper, GA
"Most agents claim they're #1 - I THINK YOU'RE #1!
I charge more than the mortgage amount to give the seller an incentive to pick up the pace on moving. However, my preference is to avoid this scenerio if possible. Several things can happen, and one is good.
Jun 08, 2012 10:57 PM
people first...then business Ran Right Realty - Riverside, CA
agent & author
If all parties can find "happy", anything is possible....and negotiable too
Jun 08, 2012 11:34 PM
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder
Here in CO a state-approved rent-back contract is a new development. I haven't used it yet, but I'm glad it's available.
Jun 09, 2012 12:42 AM
RETIRED / State License is Inactive - Portland, OR
In my local real estate market of Portland Metro in Oregon our rent-back agreements specifically state that a LANDLORD/TENANT relationship is NOT created. Rent-backs are short term and my buyer client loans will be affected GREATLY if they were "renting" the property to a tenant, especially when they have signed documents stating they will be owner occupying the premises. Rent-backs are fine and lenders allow them, (my last two transactions had a rent-back) but there can not be a landlord/tenant relationship established and it is not like a rental agreement, not at all . . . at least not here.
Jun 09, 2012 06:16 AM
Rainmaker
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Debbie Cook
Silver Spring and Takoma Park Maryland Real Estate
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