Moving – whether you’re upsizing, downsizing or just relocating – can really be a hassle, and a lot of unexpected delays can happen, particularly if you’re buying and selling at the same time. That’s why many homeowners are asking for rent-back agreements in their contracts with buyers
A rent-back agreement is, essentially, a deal between a homebuyer and the seller that allows the seller to remain in the home as the buyer’s tenant for a certain period after the closing date. During that time, the seller has to pay rent to the new owner – which can be calculated according to whatever rate both parties agree is fair.
Why should you consider asking for a rent-back agreement?
When you’re simultaneously selling and buying, a lot of things have to line up just right. Not only do you have to find your new home, but the closings on both properties have to be in sync (and they’re often not). Plus, you may need the proceeds from your current home’s sale to finance the purchase of your next. A rent-back agreement lets you avoid having to scramble for temporary housing until your new place is ready.
Plus, moving is often more time-consuming than most people realize, especially if they’ve lived in one spot for a while. The transition period offered by a rent-back agreement allows you more time to get rid of unwanted items, pack what you intend to keep and get the logistics of your move sorted out.
Buyers, naturally, don’t really like rent-back agreements, but sellers in “hot property” areas usually have enough leverage to wrangle this particular concession, and it’s definitely something you should think about.
It’s always wisest, of course, to make sure that you have a clear rent-back agreement in place that specifies how long the tenancy can last, the amount of rent that must be paid, whether there’s a security deposit required and what maintenance and repairs obligations belong to which party. Experienced legal guidance can help.