Part 2
Seller Occupancy After Sale (rent-back)
What a valuable tool for all the players when the seller is buying and selling. The rent-back begins after the sale is closed completely while the seller rents-back from the buyer. This allows the seller to financially conclude a sale on their next home while only moving once When a savvy buyer’s or seller’s representative knows the seller is trying a move-up or move-down, he/she might recommend the buyer strengthen their negotiating position with an offer to rent-back. This works well only when all the parties have been educated on their responsibilities and the rent-back agreement is in writing, including all the “what if’s.”
No Rent-Back Agreement in Writing
A train wreck in the making. Many rent-backs are agreed upon by licensees over the telephone, without a written agreement or even a handshake. Additionally, licensees might be unable or unwilling to explain the ramifications of a rent-back in any detail. When the seller become a tenant and the buyer becomes a landlord, all sort of precautions should be in place: How long is the occupancy? What is the daily fee for the rent-back? Is it the buyer/landlord’s daily costs, market rent or a $1.00 a day? What about a deposit? Many sellers balk at the mention of a deposit! Is there an agreement over maintenance vs repairs? Will both parties have insurance in place for the rental duration? What is the penalty for a “hold-over”? It’s not uncommon for the seller/tenant to proclaim “we can’t move, our new home is not ready.” The buyer/landlord needs to respect the seller/tenant’s legal rights of privacy. One cannot drop by with a vendor-a-day until move-out. All these terms can easily be spelled-out with forms drafted by real estate attorneys, (and sold at real estate boards), vs hiring real estate attorneys @ $350.00 when problems arise.
Pat Kapowich,
“Negotiating Smooth Transactions Throughout The South
Bay” SiliconValleyBroker.com
