Stayover seller pays security deposit?

JamieMay 5, 2011

I'm hearing about this for the first time and I'm wondering if it was invented by my buyer specifically for me.

The contract says the perdiem stayover rate is actually "liquidated damages".

Have you ever heard of stayover seller depositing security for buyer (or having proceeds withheld and labeled "security deposit")? I am providing a home warranty to seller and the stayover period is about 25 days.

I'm thinking I'd never see that money. Any nailhole or scratch on the floor that they hadn't noticed before would be reason to keep it.

I'm in Michigan. Is it typical for other proceeds of sale to be withheld for some amount of time by the title or mortgage company?

Your experience?

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artemis78

Our friends were the buyers in a situation like this, and yes, they had a security deposit per the advice of both realtors. I think it was held in escrow, though, so it was released as soon as sellers moved out and the house was turned over in the same condition as at closing. It's basically a rent-back situation, and with any renter you'd have a security deposit. As a buyer, I'd never consider letting the seller stay without it---if something did happen in those few weeks, you'd have no recourse if you didn't have a deposit---so it seems like a very reasonable request to me. But if you're concerned, I would document the condition of the house at closing well (just like if you were renting and wanted to be sure to get your security deposit back) and give that record to the buyer and realtors.

    Bookmark   May 5, 2011 at 9:24PM
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weedyacres

I've not heard of that, but then before I moved to Indiana I had never heard of the seller not vacating the house on the day you close. The seller of the house we bought had a clause in the contract that they vacated 60 days after closing. I was taken aback...we'd be paying a mortgage for 2 months on a house we weren't living in! And whose insurance covers it if it burns down? How did we make sure they didn't trash the place? But our realtor assured us it was standard practice in our locality. And we didn't have any problems...they moved out and left the place clean.

    Bookmark   May 5, 2011 at 9:29PM
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terriks

60 days! Wow, I would be very uncomfortable with that.

    Bookmark   May 5, 2011 at 11:33PM
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maurenemm

Is "stayover" the same as "rent back"?

We are renting back from our buyer for 45 days. It is in the contract that we put down a security deposit (and pay all rent upfront) at closing.

    Bookmark   May 6, 2011 at 8:12AM
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brickeyee

The last thing you want to do is create an actual lease since landlord-tenant law may then apply.

Calling the daily payment "liquidated damages" is one way to AVOID actual lease laws.

It is common to withhold some of the proceeds from the sale until the final walk-through after the seller vacates.

It is mostly to cover any damage that occurs after closing and during moving out.

A walk through should still be done before closing by the buyer, it is just limited since the sellers belongings are still present.

It gets more common in higher end houses that can require significant time to move out of (the last time I moved it took three 45 foot trucks).

    Bookmark   May 6, 2011 at 1:23PM
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