From time to time, UrbanTurf goes back into its archives to pick out an educational article that will be helpful to homebuyers and sellers. This article was originally published in August 2013.
When home sellers haven’t quite lined up their next home before their house is sold and the settlement date comes and goes, they may find themselves in a bit of a bind, given that the buyers now own the home, and are likely eager to move in.
However, there is an option that keeps the sellers from having to scramble for temporary housing: a rent back.
A rent back is essentially a scenario when the buyer agrees to rent the home back to the seller for some amount of time after the closing date. This can be a negotiating chip in a hot housing market or simply a kindness to a seller with a longer timeline.
Realtor Jennifer Myers offers a bit more insight into when a rent back makes sense and the risks involved:
A rent back, contractually called a Post-Settlement Occupancy Agreement, is used most frequently when a seller needs to make sure their current home has settled so they have the funds to buy their new home or some version of that.
There is a non-tenant relationship established where the seller has a license to reside in the home for a certain number of days, typically at a daily rate decided on by the buyer. In a competitive housing market, it’s not out of the ordinary for a buyer to sweeten their offer by allowing the seller to live in the home for free for a period after settlement.
In the event that a buyer decides to do a rent back, they will do a walk-through before settlement to see the condition of the home on the day they become the owner, and also confirm that any home inspection items have been repaired satisfactorily. The buyer needs to make sure there is a hefty enough deposit being held by the title company in case there is any damage done by the seller while they are there or moving out. However, since the buyer now owns the property, if something breaks in the property at no fault of the seller (the HVAC system goes out all of a sudden, for example), it is the buyer’s, not the seller’s, issue to repair.
Once the seller moves out on the agreed upon date, the buyer does their final, final walk-through and then if all goes well, the buyer tells the title company to release the deposit to the seller.
- First Timer Primer: How Much Cash Do You Need to Buy a House?
- First-Timer Primer: The Mortgage Pre-Approval Process
- First-Timer Primer: How Do Mortgage Payments Work?
- First-Timer Primer: The Escalation Clause
- First-Timer Primer: A Condo Fee Tutorial
This article originally published at https://dc.urbanturf.com/articles/blog/first-timer_primer_what_is_a_rent_back/7454.
Most Popular... This Week • Last 30 Days • Ever
The large new residential building is just the latest development pitched near the ba... read »
UrbanTurf put together a quick primer on the ins and outs of a home auction.... read »
Foulger Pratt has plans to turn the 12-story office building at 1133 19th Street NW i... read »
As the Capitol Riverfront neighborhood nears its development capacity, a new effort p... read »
The Washington Nationals great didn't move out of the area, though.... read »
UrbanTurf has compiled virtual looks at large new developments around the DC region.... read »
This Week's Find is one of the more interesting homes in DC's Foxhall neighborhood. ... read »
The mall will be reimagined as a 7-story, 325-unit apartment project with 25,000 squa... read »
While DC's rising home prices have been the story for years, there are some areas of ... read »
Brookfield Properties and the Menkiti Group have filed a second-stage planned unit de... read »
With this weekend's DC houseboat tour a day away, UrbanTurf thought it only fitting t... read »
President Obama travels to Denver this morning to sign the stimulus bill that has bee... read »
In this week's installment of Ask An Agent, a reader wonders if there is a rule for h... read »
As The Wharf prepares to begin construction, DC's houseboat community heads to its ne... read »
In this week's installment of Ask An Agent, a reader asks a fairly common question th... read »
DC Real Estate Guides
Short guides to navigating the DC-area real estate market
We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!
Intro guides for first-time home buyers
Awesome and unusual real estate from across the DC Metro