Q: Our property closes on the 10th on January we have another home to move into but it doesn’t close till the 29th of January. So we have about 20 days to live in the residence we just sold. How do we do that, write a rental contract? Do we need to give the buyers a security deposit for 20 days? We have no idea how to proceed and our Realtor is unsure as she hasn’t had any experience with this situation. Also any pros, cons or hints would be welcome.
–Lusik, Phoenix, AZ
A: In our area (Phila), there is a standard form for this. As a lawyer, I hate this because it raises a lot of issues that are not covered by the form. But it is done a lot. Think about how ofter the exact dates for the four parties involved in a buy and sell deal would mesh. Not that easily. You no longer own the home so you should put down a security deposit to cover damages. The buyer should be sure to have insurance for the property in place and you should reduce your coverage to cover only your possessions. Rent should be whatever makes the buyer whole–mortgage payment, taxes, insurance, utilities (or just agree to keep those in your name until you move out).
If your agent is not familiar with this, I would strongly suggest you find a young but experienced real estate attorney to help you draw this up. It should not cost more than a thousand dollars or so to do that and would be good peace of mind.
Linda Walters is a Realtor® with Sage Realty LLC in Wayne, PA.
A: That situation should have been thoroughly thought out before now, and that is the value of an experienced agent. You will be expected to forfeit possession based on your states laws for transfer of title or deed.
What you’ll want to work out is a post settlement possession agreement-if the buyer agrees. If not you might be in breach of contract. If you do not relinquish possession, you might want to talk to an attorney right away to see what your options are. If the buyer has some time on their hands and can delay moving in and are reasonable, maybe they’ll give you a fair rental agreement. There are many pros and cons for both of you, but the buyer takes on the most risk in doing post settlement possession, and will no doubt expect to be compensated fairly for the risk assumed. If you aren’t willing to cooperate, they will expect you to perform the terms of the contract. The clock is ticking now!
Jim Mellen is a Realtor® with Re/Max Peninsula in Williamsburg, VA.
A: Your Realtor should consult with their employing broker for guidance.
If you are less than two weeks from closing and the buyer is unaware of your need to stay in the home, you may be up against a wall. If the buyer is okay with you staying after close of escrow, then you would draw up a 20 day or so lease contract which would include a security deposit.
If buyer is not OK with you staying, then pack your things in a portable storage unit such as a “POD” and find a temporary place to live (extended stay hotel, family, friend).
Have the POD transported to the new home and placed on the street in front of the home (make sure it will be OK with the city). If not OK with the city, then to some other temp storage yard (POD company should be able to help you out), then to your new home when it closes escrow.
***The laws change once you go from homeowner to tenant, or to landlord. Legal liability changes and different insurance coverage is recommended. It is a whole new bag of worms and I always recommend to my buyer clients not to allow the lease back, unless they want to become a landlord.
Adam Aguilar is a Realtor® with Reliantra in West Toluca Lake, CA.
A: In WA State we use an MLS form 65B. This form is “Delayed Possession Rental Agreement”. With the permission of the new owners, you can occupy the property for an agreed on amount of time. Compensation in the form of rent will need to be negotiated and agreed upon between you and your buyer. Have your Realtor check with her local MLS Board for the correct forms in your area.
Teresa Parker is a Realtor® with Coldwell Banker Bain in Kent, WA.
A: Your agent should ask her broker for help. I know the answer but I am not a Broker in AZ…so I prefer that you find a Broker who can answer this. Your thoughts are along the right track. You can also ask to delay the closing for 20 days…but you will have to pay the taxes and other pro-rated fees. The buyer may have a mortgage rate risk etc.
Nancy Gastel is a Realtor® with Nancy Gastel Realty in Marietta, GA
A: If the buyers are willing, then a typical rental agreement because its less than 30 days is not needed. There should be an agreement that your Realtor can use that just states how many days and a per diem (which is usually the new buyers mortgage payments divided by 30 x the days) and pay them through escrow.
Beverley Hourlier is a Realtor® with Hilltop Chateau Realty in San Diego, CA.
A: Ask your agent to prepare a possession after closing addendum – NOT a Rental Agreement (Rental creates certain rights in each state as a landlord and a tenant and you do not want that) – This addendum would state how much you pay them daily for the time you stay in “=the house. Limit the number of days to a specific maximum amount and pay for the expected days up front and work that direction.
Mike Grumbles is a Realtor® with Exit Realty of the South in Franklin, TN.
A: In my experience we have drawn up a “short term lease agreement” that outlines the responsibilities of each party. At closing a security deposit or some of the proceeds from the sale will stay in escrow to ensure that the property remains in the same condition as closing day. The utilities stay in the seller’s name, insurance, water etc are paid by the new buyer. Also the cost to the “tenant” which will be you is usually a proration of the new Buyer mortage or a predetermined daily amount. Remember that the property is no longer yours and caution should be excercised throughout the moving process as you will have a security deposit at risk. Best advice, have a short term lease that spells out the rights of both parties.
Donna Schulze is a Realtor® with CENTURY 21 Seaside Village Properties in Osterville, MA.
A: Get your lawyer to write up an agreement. Yes- the new owner should require a security deposit. All the risk is on the new owner so be generous in your negotiations or go rent a motel room or stay with friends.
Mark Bergman is a Realtor® with Bergman Real Estate in North Creek, NY.
A: At the close of the sale, the leaseback will be executed as if it’s a normal rental agreement between the landlord and tenant. Only difference is that the seller will be the tenant. Typically, a security deposit is held in escrow until the buyer approves refunding back to the seller at the expiration of the lease.The formality of a final walk-through is required in order to verify property condition.
Dominic Naidoo is a Realtor® with Westside Properties in Pacific Palisades, CA.
A: Was this not addressed in the original purchase contract? You’re assuming that the buyers are okay with leasing the property back to you, but it’s reasonable to expect that they made plans according to the closing date. Until you know for sure that the new owners are even open to leasing the property back to you, I’m afraid that it’s a moot point. You may have to consider the (very real) possibility of having to find other accommodations for those 20 days.
Alex Cortez is a Realtor® with Wailea Village Properties LLC dba/Island Sotheby’s in Kihei, HI.
A: Many times the new buyers are anxious to get in and also are nervous about someone living in their new home, after all they just bought it in the condition it is, and if you break something, take something they have no recourse. This should have been addressed when you were in the contract stage, not the moving stage.
Pat Baker is a Realtor® with Leslie Wells Realty in Parrish, FL.