Seller rent backs. Perhaps this is the first time you’ve even heard of the term. Now, you’re looking for information about seller rent backs and what these situations entail and what they mean to your life. If you’re new to the home selling process, you’re probably discovering a whole lot of new things along the way. You’re hearing unfamiliar terms and this is no exception. Although, you can probably guess what it means, even though it’s likely still unclear exactly what it is and means for you.
What is a Rent Back or a Post-Closing Possession?
So, you put your home on the market and it’s generated a decent amount of interest. After a few false starts, you’ve finally accepted a purchase offer. And, you’ve got through the nail biting scenarios of waiting and accepting the earnest money deposit. Then, there was the worry and anxiety which come waiting for the various inspections. You successfully made it through the home inspection. Whew. Then, the pest inspection. Yeah! And then, the wind mitigation inspection and worst of all, the appraisal. Now, you’re on your way to closing when you get word the seller is requesting post-closing possession.
“The reasons why a seller might need to rent back after closing vary, but it’s not uncommon for a seller to request a rent back. The home the seller is buying might not be available at the time your transaction closes or the seller might not be able to find a moving van on the last day of the month, when demand for moving vans is high.” —The Balance.com
What? Post-closing possession? What’s that? You hear it’s a seller rent back, meaning the seller wants to stay in the house after the closing. This comes out of nowhere and it’s at the very least, unsettling. But, you shouldn’t resign yourself to despair. Seller rent backs are actually quite common. Although, they aren’t without any inconveniences. Sure, there are also upsides to accepting a post-closing possession. But, you do need to know a few things about seller rent backs.
What Home Buyers need to Know about Seller Rent Backs
Before we jump into the risks of seller rent backs, let’s take a quick look at the benefits of post-closing possessions. First of all, the property will continue to be inhabited by the same people who sold you the home. Second, you get paid for the concession. Third, it gives you more time to move. So, it’s not that bad a situation. Now, let’s look at risks of seller rent backs:
- Property damage. Okay, it’s possible the seller (now your tenant) will damage the house, but it’s unlikely that will happen. Although it’s still a possibility because accidents are just unpredictable. Leaving a pan on the cooktop burner too long. Or, another oddball scenario.
- Late or unpaid rent. Perhaps the biggest risk is the seller-tenant failing to pay rent on-time or refusing to pay it outright. Do these situations happen? Sure. Are they common? Not at all. Nevertheless, it’s a possibility, although a very small one.
- Failing to vacate on-time. Here’s the most likely thing to go awry. The seller rents the property and encounters a problem which makes moving out unrealistic. If it does happen, there are remedies in the post-closing possession agreement. In other words, it’s more of an inconvenience than anything else.
- Appliance and fixture removal. Another possibility and one that does happen from time to time is the seller taking appliances and/or fixtures with them, even though they’re not supposed to remove them.
If you’re going to sell your home in the near future and buy a new house, please don’t hesitate to phone me at 407-616-7286, I’ll be happy to speak with you.