It's certainly not unheard of but it can lead to problems.

The main question is whether your son is confident that the sellers are a) responsible people and b) really intended to vacate on schedule.

Whatever is agreed to should be clearly spelled out in a written contract, not just an oral agreement.

If your son is not inconvenienced then he should get a daily proration of the mortgage costs as rent (at least) and I would recommend holding back a serious chunk of the purchase price in an escrow account to be released after the property is vacant and a satisfactory walk-thru is accomplished to make sure property is in same condition that he bargained for.

There is also the homeowners' insurance issue to be dealt with. Some insurance companies will cover a limited length of lease-backs, other refuse. Your son should be frank with his insurance company and the sellers should purchase renters' insurance on their possessions during the lease-back period. (And the agreement to lease back should specify the status of insurance, for both aprties.)

There are also some issues regarding complications getting lease-back former owner tenants evicted if they don't vacate on schedule. Your son would be wise to determine what local or state regs might apply, before he agrees to the deal. The attorney handling the purchase (his, not the sellers') should be able offer an opinion on this.

HTH,

Molly~

Yes, a closing can happen in 30 days.
Rentbacks are not uncommon - we've used them when selling and we did move when we said we would.

Why doesn't your son counter with a closing on the 30th if he's that averse to a rentback? If the sellers don't agree, go with the 19th closing, do the rentback for 11 days. Timing things to the last day of the month makes sense if leases are involved...ie is the seller moving into an apartment? Is your son moving out of an apartment?

Molly's comments about things to consider are valid and should be looked into. And as she mentioned, make sure all of this is written into the contract by your son's lawyer.

As sellers, we did a rent back when we sold our last house. It was needed because we gave the sellers of the house we moved to a rentback - they couldn't close on their new house right away.

What is the reason for the rentback? When we sold our house, our new house was not completed, and our buyers had not yet sold their condo. We asked for a rentback, and they said that we were welcome to stay until their condo sold. So we closed in June, and moved out in September. In the meantime, we gave them enough to cover their new mortgage payment. It benefited us both (less time for us in temporary housing, less time for them making double mortgage payments).

Not sure what made them trust us to take care of the house, and to vacate at their request (our house was still not completed), but I'm glad they did!

This topic has been discussed before and gets very heated, so hold your hat! lol

The reason being is that some people believe they should not move out of the home and remove their belongings until they have the money in their hands. It is common in some regions, but not others.

Those not in favour of them feel that it is too risky for the buyer in terms of liability, possible damage to the home and eviction issues. I am in this camp.

When we bought this house back in January, the seller requested she stay in the home for three days after closing. I flat out refused. I was not taking any risks whatsoever. She was leary because she had a deal fall through at the last minute b/c the buyer backed out, so I could understand her apprehension, but we were not willing to accept this and it was a deal breaker for us.

I countered back refusing, she countered back 2 days, I refused, she countered 1 day, I refused and told my realtor to tell her realtor that this WAS a deal breaker and we had no problem killing the deal. Her realtors finally convinced her to relent and we got immediate possession.

I'm glad we did it this way because her teenaged children were horrible. The house was left filthy and we later learned from neighbours that they were very destructive. Gawd knows what they could have possibly done to what would have been our house.

I don't think your son should accept the lease back. It's too risky. He sounds like he's a first time homebuyer and that is enough reason to refuse. He's not familiar with the legalities and risks.

Instead, counter back closing on the 30th with no leaseback. It sounds like they want a quick closing to possibly avoid paying another mortgage payment. Tell your son to stand firm on this. The seller may counter back a shorter time frame. This is a tough market and all he has to do is tell the seller he will walk if he does not get immediate possession.

Not only is this a risk for him liability-wise, it will cost him more money to get a lawyer to draw up an iron-clad agreement, it will take him more time dealing with the insurance company etc. What if they fall on the property, break their leg and sue your son? He is buying his first home and should not be putting himself in the position of any adverse issues that could haunt him for many years.

Counter closing in 30 days. Absolutely refuse the leaseback.

We have rented back after closing on several occasions. It is common in some parts of the country although you'll get many opinions from people on this board that would not let the seller rent back.

If the seller is allowed to rent back it is important for your son to get a very good security deposit held in escrow in addition to getting all the funds for renting back. In addition, make sure there's a clause in the contract that states "failure to vacate on or before contracted date of possession will result in total loss of security deposit" or words to that effect.

When we rented back we had two walk throughs, one the day of or day before closing and then one the day we surrendered possession. Any damages to the home, if any, would be deducted from the security deposit being held.

We had one occasion where an elderly couple wanted to stay in the home we were purchasing for 10 days past closing. We had no issue with it. We had a very nice relationship with them and when they vacated, the home was immaculate and they offered to leave the pool table, riding lawnmower and grill for us because they'd no longer need them in the home they were moving to.

It can work if your son wants it to and takes steps to protect himself. Definitely check into the possibility of insurance issues, although in any of the times we rented back, there were no problems with insurance coverage for the time we were renting.

I've done it both ways - rented back and allowed my seller to rent back. The language covering it was in the purchase and sale agreement. If that is well written, there should be no problem. I called my insurance company and they temporarily changed the insurance

I think we have always closed in 30 days.

My mom rented back to the sellers for 3 months. The sellers wanted to stay and let their daughter finish the school year and my mom needed time to move from Maryland to Texas. It went smoothly and the sellers left the house in what we thought was excellent condition.

It was vacant for 2 months after the sellers moved out and my mom moved in (I lived close by) and when my mom moved in the wall oven didn't work. It worked when the house was sold.

It was a couple of hundred to fix. We don't know at what point it quit, it could have been when the house was vacant, it could have even been after my mom moved in, she didn't use it for a couple of weeks.

In my area the seller vacates the day of the closing and the closing doesn't happen until the buyer has the chance to walk through the vacated house.

We let a little old widow seller stay three days "so my friends can help me move." After she left we discovered she had used heavy furnishings and drapes to hide that an addition to the house had sunk an inch. It was going to cost $10K to raise it. (No, the home inspector we hired did not see it, and all we got back from him was his fee.)

There was one benefit to this. We decided to do a teardown unstead of remodeling. I'm happy about the new build but not about being fleeced.

We rented back for two weeks when we sold our house, and allowed the folks that were in the house we bought stay for a week or so, I think. No problems with either...we left the house is good shape and got the house in good shape.

It's a nice accomodation to make, and if the language is written correctly in your contract, it's not really a huge risk.

If your son does not want to do it, and he is on a buyer's market, have him tell them "no". If he wants to close on the 19th, they must vacate the 19th, if he wants to close the 30th, they vacate the 30th. Have him write a time in so he will have the ability to walk through an empty house.

Regardless of what is customary in an area if he is purchasing in a buyer's market he should not have to do anything that makes his possession of the house difficult. If he's in a seller's market, he may have to do the rentback if he really, really wants the house.

It's a nice accomodation to make, and if the language is written correctly in your contract, it's not really a huge risk.

I'm not willing to make such accommodations that I can discover something like chisue did or be sued when the seller slips on the ice, bashes their head and sues the buyer.

It is asking for trouble. Sure, there are nice people out there who have genuine intentions and will do nothing to damage the home, but I would never be willing to risk it. Ever. Even in a seller's market.

I would be wondering why they want a short closing but not move for a full 30 days. The only answer I can come up with is that they need the cash in hand well before they can secure other housing. This puts your son in a very good negotiating position. Agree to the rent back but lower the price or charge a hefty rent back fee.

I don't think there's anything underhand going on - when we put in our offer to buy we always specify a closing date, but it may be 2-3 mos. ahead and all kinds of things can happen in that time, one of which is that our new place may not be ready when it should be, so we then ask to stay longer in the old place, paying whatever rent is stipulated.

The reason being is that some people believe they should not move out of the home and remove their belongings until they have the money in their hands. It is common in some regions, but not others.

Those not in favour of them feel that it is too risky for the buyer in terms of liability, possible damage to the home and eviction issues. I am in this camp.

Normally, I am also in agreement with not doing it but after what we went through and things I'm reading, I'm more open to do it.

I am reading so many stories of sellers getting screwed by buyers. Buyers are changing their minds the longer you wait to close, which is why people want a quick close.

We closed on the 1st Tuesday after Memorial weekend. As everyone knows, Monday is a holiday and Friday people usually take off of work early to go on vacation. The short version of ours was the buyer signed the contract, had inspections then let the list of repairs wait until our agent called them a week later (which was 1 day after it should have been in). They gave us the list then got married, going away for 2 weeks without being able to be contacted. Their "agent" (the wifes grandfather) made decisions for them which they did not agree to after getting back. Almost a week before closing we were still going back & forth to agree on a solution, then a few days before we did agree & it was written into the title work.

The Friday before closing (that holiday) we get a call at 6:30 - 7 pm saying they weren't agreeing; so they changed their minds again. Here we had movers scheduled that I couldn't call off as well as a U haul and people to come load my plants into it.

Some how we managed to close that Tuesday, but it was a close call and I'm not sure after that if I will vacate a house on the same day. The only reason we lucked out was that everything was already in the title work, so they'd have to redo their mortgage & stuff from what I understood if we didn't close that day.

If your son does not want to do it, and he is on a buyer's market, have him tell them "no". If he wants to close on the 19th, they must vacate the 19th, if he wants to close the 30th, they vacate the 30th. Have him write a time in so he will have the ability to walk through an empty house.

Regardless of what is customary in an area if he is purchasing in a buyer's market he should not have to do anything that makes his possession of the house difficult. If he's in a seller's market, he may have to do the rent back if he really, really wants the house.

I agree that it has to be comfortable for the buyer.
As a buyer with this market I don't think I'd have a problem with it as long as their was enough money to cover breakage etc.

lucy, I don't necessarily think there's anything underhanded going on either. For me, the risk far outweighs the benefit. There's too much room for something to go wrong where the buyer is screwed over big time.

"I'm not willing to make such accommodations that I can discover something like chisue did or be sued when the seller slips on the ice, bashes their head and sues the buyer."

You hold back suitable funds at settlement until the vacant house inspection is complete.

As for slipping on the ice and suing, let's get real.
You have insurance, and if the hold over clause is written correctly you are completely safe.

NEVER call these thing 'renting back.'
The LAST thing you need to do is allow ANY landlord-tenant laws to come into play.
The person simply is allowed to remain in the house as a 'tenant at sufferance' under the terms of the sales contract.
If you are worried about them vacating double the daily payment after the hold over period expires, then make sure to escrow that much and more.

Hey everyone,
Thanks for all the great advice. My son found out a great deal more from the REA as soon as he knew which questions to ask--thanks again for that. It turns out the seller has a very good reason for needing the extra time--he's finishing dental school and will be in the middle of doing rotations those last 2 weeks of the month. They have children & are moving locally but on the other side of town. This info made a lot of difference to my son.

Also his questions to the REA helped them to come up with the correct forms to protect both buyer & seller without "renting back" or causing undo harm. Seller has to keep up insurance, utilities, maintenance etc. There is no rent but son gained 1% in closing costs. It is a 2 page document (too long to go thru here)with all the bells and whistles you all mentioned--they both signed.

Again, thanks for the attention to detail. I was asked to read it and I knew what to look for because of the forum. It would have been helpful if the REA had mentioned there was a form before hand instead of leaving us hanging. There's experience there but maybe a communication problem. Son is newly married and nervous about everything.

The new house is perfect for them and bank says no problem on the closing date--I guess we just cross our fingers and hope the time passes quickly!

brickeyee - When the seller requested this, I refused but said I would agree if a significant amount of money was placed into escrow. She refused the escrow part saying she didn't have any money. Turns out that was a lie. She came out of the house with almost $100K.

I don't think the buyer should risk a claim on insurance if there is damage during the 'staying period' after closing.

OP - Glad it has worked out for your son. Did he calculate the 1% in closing costs if it will cover his mortgage for that period? Essentially, the seller will be living in the house for free for two weeks at your son's expense unless that closing cost concession equals the mortgage for that period of time.

Sparksals: Good question! Thank heavens I can say yes. The 1% is a little more than a month and a half of mortgage payment.

I am sorry that our legal system has fostered a climate where liability is the first thing that anyone thinks of.

The house we bought in AZ was supposed to have closed on Friday, but my banker failed to hit the submit button when wiring the funds and the title company failed to alert me to this until 4:00 on Friday afternoon.

This could have been a mess either because our seller wanted to have a look at the back-up offer or because both parties wanted to be compensated for the extra 3 days of insurance etc. Fortunately, all parties were reasonable and no additional documents were required.

I hope we can all be a little reasonable. We gave the sellers time to move out of our current house. Our buyers gave us time to move out of ours. No harm to either party. If the insurance company is kept informed, I don't see much possibility of excess liability. Let's have a little faith in each other. I am sure that a number of you can tell a horror story you heard, but is fear going to run our lives for us?

"I don't think the buyer should risk a claim on insurance if there is damage during the 'staying period' after closing."

The sellers insurance would normally cover them for the period.

Being scared about things like insurance for a few days is bordering on the paranoid.
You have the insurance for a reason, and while increasing the chance of a claim is one thing, holding over is done many times and no flurry of insurance claims seems to have occurred.

The door to door salesman walking up your sidewalk could get injured also.

Wow, I have never heard of this before. I'm in Kentucky, and it is standard procedure to have 30 days AFTER closing to vacate the property - no rent or anything. We just closed on our house two weeks ago and are still moving. We are trying to hurry up just to be nice, but we do have 30 days. Unless the property was vacant to begin with, no one here gets immediate possession. Isn't it interesting how different things can be in different parts of the country?

Kelbrad -- real estate is handled differently from region to region and it never ceases to amaze me the differences. Each time we'd be transfered we'd have to learn what the norm was for a specific area. Some areas it is the norm to stay past closing and no one thinks anything is wrong in doing so. Some areas of the country earnest money is much more substantial then other areas of the country as well. I'd have a difficult time handing over possession at closing if I only had $1000 in earnest money from a buyer.

A friend of mine was burned by buyers not showing up to closing and they only had put down a small amount in earnest money. So the next time she sold and the buyers wanted possession at closing, she said "sure if you increase the earnest money". No way was she going through the problems she encountered the first time. She figured the more money that was tied up, the more difficult it would be for the buyers to walk. The buyers didn't want to put down additional earnest money so they negotiated that my friend could stay past closing.

Sellers are getting burned in this market by buyers walking before closing and have to protect themselves. It's not all about the seller nor is it all about the buyer, it's a mutual contract that should be negotiated to a win/win for both seller and buyer.

You're right, devorah. The legal system and frivolous law suits has created an environment where the first thing one should consider is liability. I don't think that's paranoid, I think it's wise.

Unfortunately, not everyone has good or honest intentions and I'm not willing to take he chance someone will be able to screw me over.

brickeyee - the seller's insurance may cover them for that period, but the fact of the matter is, the buyer is the owner and must have insurance on the home. What if there is a fire due to the seller's negligence?

Sure, it may be paranoid, but I'm not willing to trust complete strangers with my greatest asset.

It's fairly typical here not to get possession at closing. In fact it's such a plus, it's put on the advertising. The last house I sold.......well........they had plenty of time to get their stuff and selves out, but they didn't. It was a divorce situation and I gave them two weeks, free so that there wouldn't be an undue burden on the woman who was at the mercyh of friends to help her. Then she asked for a few more days so her adult child could be there for some local event. Fine, no problem. Then when the day came to get started on going in to make repairs and clean, the house was full of her 'stuff'. We even helped her move it out. LOL Then we took in her dog, whom she couldn't move to her new flat, and gave it a wonderful home. LOLOL. So, yes, there are a few people who have more compassion than fear.

i guess what surprises me most, is that you put your home on the market and then get an offer. why are sellers not prepared to move once they decide to sell their home? i would never consider letting someone stay in the home once i have taken possession. i don't care what is the norm in whatever region i may be living in at the time. when you sell a home, be ready to move. we have sold two homes in our lifetime, so i know i am not as experienced as most of the posters here. we spent a couple of weeks readying the homes before we put them on the market. during that time, we not only cleaned and prepped the home, but packed up most of the possesions and put them in the garage. we left the minimum of stuff out to look like a lived in home. we put our second home on the market on a friday and had two full price offers by sunday. we closed in slightly less than 30 days. that was in may of 2007, so not that long ago. we turned over the keys at closing. i guess i just don't understand why people aren't ready to move out. i think a lot of people just don't like packing their stuff up until they have a contract, and if you don't have a place to live ready for when you sell them home, then why did you put yours on the market?? i am not asking the poster these questions, just throwing them out in general. i think today when you put your home on the market, you better be serious and be ready to move as quick as possible. since it is mostly a buyers market during these tougher times, i believe you don't give them a reason to walk away once they have submitted an offer. a quick closing, easy in and easy out is the most desirable thing you can offer. what puzzles me too is that people accept that it is what is the norm in their area, so they go along with it. just cause it is done, doesn't mean you have to do it.
ladybugbaby

"The legal system and frivolous law suits has created an environment where the first thing one should consider is liability."

Anyone can sue anyone they want.
The number of truly "frivolous law suits" against individuals is very small, and if they are actually frivolous you simply bring a counter suit.

Frivolous suits are normally brought against deep pockets in the hoe of a 'go away' type payoff.

It is paranoia to have every act be affected by the remote possibility of being sued.

I have been on both sides of the civil court a number of times personally, and more often as an expert witness.

I take prudent precautions and have plenty of insurance since as a PE I remain 'on the hook' for things I stamp off approve basically forever.

If I was so scared of being sued I could never perform any work at all.

"i guess what surprises me most,.......... why are sellers not prepared to move once they decide to sell their home? ladybugbaby

Not everyone has enough liquidity or credit to buy a new home before they sell their present one. And their buyers might be in the same situation and offered a contract on contingency of selling their home. It can be like trying to herd cats to get them all done in the proper sequence, through different mortgage firms and realtors to wrap up closings so that they all fall in a convenient manner for everyone involved. Somewhere along the line, somebody will be delayed getting their new home quickly enough to move at their closing. And of course that can cause a domino effect and have an impact to several parties who essentially are completely dependent on another to have their closing go flawlessly.

Of course a party can rent storage for their furniture and stay in a motel for a few days/weeks/months.....but for a very short term of time, it's a ridiculous expense to incur just because the people who bought their former house are scared of liability.