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The Temporary Buyers Leaseback
Dated: June 7 2016
So, youâ€™ve got your house on the market, and along come those perfect buyers. You know the ones-full price offer, donâ€™t seem too picky upon necessary repairs-all around seemingly stand up folks. Then you get an odd request; the buyerâ€™s lease is running out, only two weeks to closing, and theyâ€™d love to pay you rent before funding. You, the seller, have already moved on, leaving the property vacant, so you consider, why not?
Before entering into any kind of lease agreement prior to closing, there are several things to keep in mind. Always have a discussion with your realtor before deciding upon the best course of action for your particular sale.
First, consider the liability issues and make sure to call your home ownerâ€™s insurance prior to the buyer moving in as tenant. You may have to pay more for coverage, but it will be worth it in the event of a natural disaster, personal injury, and/or damage done by the tenant themselves. The tenant/buyer should also obtain and provide proof of renterâ€™s insurance, to protect their belongings as well. Next, consider your lease terms: daily rental amount, additional earnest money as security deposit, potential hold over consequences, and who pays utilities. You might even stipulate that the tenant/buyer is to make no alterations to the home prior to closing.
While it may not be feasible, requiring final loan approval/documentation might also be prudent, or at the very least a discussion with their lender, to get an idea of their ability to qualify for this loan. In the event that the buyerâ€™s financing is denied, you will be left with the task of removing them from the property to relist. Each day is crucial, and high hold over charges are sometimes not enough to motivate a tenant to vacate the property, especially when emotions are involved.
Careful consideration is key when imposing a buyerâ€™s temporary lease of the property. However, with diligence and the help from your agent, it can be done with respect to both parties needs and wishes.