This market has brought several challenges. Sellers who cannot and/or will not move until they know the money is in the bank and title has transferred. Many sellers are requesting to retain possession and/or rent back after close of escrow. Typically up to 30 days. I have seen some who need up to 90 days.
Pro- For seller definitely assures them of money in the bank and the funds to be able to move.
Provides breathing room to pack and locate another home.
Provides more time to clean house per se… that is sell items not needed and/or give to a charitable organization or toss.
Buyer-In a sellers market this could be a clincher in a multiple offer situation.
Buyer can confidently give notice at present location knowing they will have a definite home on such and such a date instead of giving notice when the deal has not been finalized.
Things to consider for both parties… You have now went from Seller/Buyer to Tenant/Landlord… Consideration should be accounted for in escrow for rents. Typically we determine rents on lease back by taking buyers PITI (Principal, Interest, Taxes and Insurance) on their new loan divide by 30 days and have the escrow company withhold amounts as agreed to in purchase contract. All is negotiable.
Should be determined in writing prior to close of escrow. Buyer needs to make sure insurance is in effect. Seller should check with their own insurance as to what is covered in this type of transition. Seller is responsible to maintain the property while in their possession. Buyer now becomes responsible for maintenance of the home for any repairs that might be needed. Would suggest a home warranty be obtained to cover unexpected issues that might arise. Murphy’s Law always shows up post sales in one form or fashion. Some frown on lease backs but if done properly will be a tremendous help to both parties.
Can complications occur? Unfortunately yes… sometimes sellers have not made the proper arrangements and feel they can take advantage by staying longer than contractually agreed to, leaves the home in total chaos, does not report broken items etc. Buyers get impatient and want possession sooner.
Escrow instructions should be mutually agreed to, to hold out a little more as a deposit for peace of mind on buyers side.
Both parties insurance company needs to be contacted to insure there is no misunderstandings in the event of a fire and/or other natural hazard that would result in claims.
Have contract or instructions in writing as to details of the leaseback. Remember failure of either party to perform could result in litigation.
Most lease backs perform without issue. Just KNOW your rights whatever side you are on and ALWAYS have instructions or contract in writing to lease back.
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