Buying a home is one of the most exciting – and stressful — things you’ll ever do. Typically, homebuyers don’t breathe a sigh of relief until they’ve closed on their home and have the keys in their possession. Until then (and sometimes after) a lot can go awry with the seller. One of these things is that the seller is not ready to move out by the date the buyer officially owns the home and is ready to move in.
This can happen for any number of reasons. Maybe there’s a delay with the closing on their new home. Perhaps there’s a family emergency they have to stay in town to deal with.
Is a rent-back agreement an option?
In these cases, a seller may ask to rent or lease back the home from the buyer for a short time. The buyers own the home, but the current occupants continue to live there for a time (generally up to a few weeks but possibly longer) and pay rent.
If you don’t have to vacate your own home immediately, this might seem like a good deal. If you’ve still got a couple of weeks left on your apartment or home or you’re just moving from a relative’s home, why not get a little extra money? If you and the sellers can work out a rate you both agree on, why not?
The biggest downside is that you’re essentially becoming a landlord. You own the property, but people are living there who know they’ll be leaving soon. They could break the dishwasher, leave the bathtub running or crash their car into the side of the garage.
Why a written agreement is necessary
You can avoid the financial fallout for some of the worst-case scenarios (and less destructive ones) by putting a written agreement in place. You can specify things like:
- Daily rent (including utilities)
- Your rights to enter and/or move things into the property
- Consequences if the seller isn’t out on the new agreed-upon date
- The seller’s responsibility for damage done during the rent-back period
If you decide on this type of agreement, don’t make it a do-it-yourself contract. Ask an experienced real estate attorney to work with you to draw one up. The cost of not doing that can be far greater than the cost of professional legal guidance.