It is not uncommon for short sale sellers to have challenges moving out. So much so that I suggest my buyers add into the contract that the house be empty 3 days prior to close of escrow to make sure they are out. If they are not out, they become tenants. If they become tenants, they must be evicted.
Now,saying that, 'tis the season to have some understanding of moving out around the holiday time can be hard and finding a rental even harder. But, there needs to be motivation to move. So, I suggest the rent back fee be more expensive then it would cost to move on. It may sound cold but I agree with others below, you are buying a house for yourself, not to be a landlord.
If there is a way to offer other incentives? The agents can help find a rental, help organize moving, and make sure they move. It is my opinion that rent backs in short sale situations particularly are very risky. Remember, this home owner has most likely been living rent free for a while.
To understand your rights and risk of the current home owner remaining in the home past close of escrow, it is best to consult with a real estate attorney. Consultation fees are $300-500 but may very well be worth it.
The house was successfully closed a few days ago. The previous owner did move out a few hours before we received the keys. The house was kinda dirty because she said she didn't have enough time to clean it but we seriously didn't care since as long as nothing was damaged. We love this house!! Anyways, thank you everyone for your advices!!!
Let us know the outcome of this situation would you...? Many times we have folks come on here asking questions and seeking advice or opinions on how to handle situations in a real estate transaction.
There is actually a form for this dilemma if you wanted to let them rent back. However all it does is protect you and give you a more firm legal footing if you had to do the "eviction thang"... which I know, you clearly want to avoid.
Your circumstance is not all the uncommon... I think many, if not all of the Agents/Brokers that have given you their opinions and offered some advice here have been there representing a Buyer or Seller in a similar situation as yours.
There really is no contract that will "insure" a person does the "right thing" and actually fulfill their obligations in a written contract.
That's why we have courts to resolve these kinds of issues if they don't and like I said... I know you want to avoid that if possible.
I think the answer you got to maybe delay the closing might work if you have time on the short sale approval and your loan documents don't expire. And... I agree with the suggestion for the Seller's agent to assist that gal in finding a place to live... shouldn't be all that hard... unless the Seller is "picky" or doesn't have the $$$ for a 1st month's rent and Security Deposit...
Let us know what happens... We'd appreciate it believe me...
I hope this helps...
Make it a Great Day...!!!
I would strongly encourage you to not close on the home until the seller vacates. Once you own the home and the seller is still there your leave yourself open to many possible issues. The seller would be your tenant and she may not move when you need her out. You would then have to possibly evict her to get possession. As for your final walk through before closing, I would do that just prior to going the the closing so you can do a good inspection of the property without any of the seller's personal property present and you can then see if any damage was done to the property. If the seller needs to more time to move out delay your closing until that happens. Ask your agent for assistance. Before your move forward with a tenancy situation I would consult a real estate attorney for further advice.
All the best,
Just a quick comment on your "... i don't want her to mess up the walls or the floor or anything."
If the Seller does damage or loot the property their Short Sale anti-deficiency protections can be voided!
As you can read here:
"CA Senate Bill 458 Now Prohibits 1st/2nd Deficiency Judgments*"
The fact that the seller's request keeps changing would make me suspicious. Give an inch, and you may never see them leave without a lot more heartache and stress. Make a clean break. Have them move out a minimum of two days prior to recording, do your walk through, and change the locks.
The ultimate decision is yours, but whenever you feel uncomfortable with the situation, go with your gut. Follow the contract as it is.
Good luck. Don't let the seller walk all over you!
This is a fairly common and unrecommended occurance. Being reasonable, understanding, and desiring a home that results in unwanted landlord status should be given careful consideration. There may be more at stake than is expected.
Prior to moving on with this consideration it would be in your best interests to process this with your attorney. It's always best to understand completely and there may be more here than meets the eye.
I am assuming from your post that this is a short sale, and again, even though you want the house, the seller has more to lose by not playing on your terms (no sale, breaching the contract, and possibly a foreclosure). They should have been securing a new place to live at the inception of your offer 2 months ago. One week has already turned into 2. Who's to say they will have a place in 2 weeks? What if they don't? If you close escrow before they vacate, you could end up having to evict them should they not move.
Have you discussed this with your agent? Let your agent know you are uncomfortable with the proposed rent back this late in the game and let them deal with the listing agent and seller. They can advise you on the best way to protect yourself and your purchase.
BMC Real Estate
CA DRE 01463631
Note: the above is not to be considered legal advice or any form of agency relationship, and are purely my opinion.
No....do not do this without a proper lease and without them paying rent. This sounds like trouble. If it were me? I'd wait until they were out to close.
Your agent needs to be helping you on this....and get rent in writing, a solid move out date and be careful.
If a date was put into the Possession line, then the seller has until 11:59:59 pm to hand over the keys on that day, even if it's the same day as closing.
Also, were any amendments signed for the extra week?
Talk to your agent about the final walk through also. Maybe you can do it the day of closing in order to make sure that everything is in order.
During one of my sales, it was stated in the contract that if the seller stayed past the 3 day limitation, he would be charged at a rate of $200 per day. The seller moved out on the 3rd day.
Goold luck to you.
I would not do this without an agreement in place. If you can't get one in place, it may be best to extend the closing date. Talk to you attorney to be sure you are protected.
Good luck to you,
Unwavering Commitment to Service, Unsurpassed Results.
I have talked to my agent, she also thought it's unreasonable for them to make that request and she advised us not to agree on the 2 weeks stay. So we asked her to tell the listing agent not only we denied that request, we would also like to ask the seller to move out before closing.
They already changed from 1 week with rents to 2 weeks without any rents before we even close the deal. That really makes me wonder whether they are trustworthy or not. Who know if the seller will actually move out after 2 weeks?
This is really frustrating because we feel like they're just trying to take advantage of us while we were trying to be nice.
While normally just a simple request to have more time to move, there are potential risks and considerations that must be weighed by A Buyer when the Seller wants to maintain possession after close of escrow. My understanding is that allowing a Seller to occupy the property after the original possession date creates tenancy rights. As such, issues common with rental property come into play.
The following document is an excellent source for understanding the "ends and outs" of renting from both the Landlord and Renter positions. http://docs.Steven-Anthony.com/Landlord-TenantGuideCA2010.pdf
Everyone has a different level of personal risk aversion. Right now, this seems like a "need" versus "want" decision. Personally, if I were in the same situation I would not grant the Seller's request because I would need to know secondary circumstances after the fact would not lead me to kicking my own backside; however, if I had such a temporarily lapse in judgment I would want all of the following terms understood by both parties, located on a single page, and agreed to before moving forward:
1) The exact terms of possession
3) Late charges
4) Responsibility for utilities
5) Entry rights
6) Responsibility for maintenance
8) Responsibility for insurance
9) Any other special terms deemed necessary.
Section two of CAR Form Purchase Agreement Addendum (PAA) was created to address the considerations above when possession is delayed. I would highly recommend you cover section two with your RealtorÂ® to decide whether its use might be appropriate in your situation.
Or, "Just Say No!"
Second, I will state for other readers in a similar situation: if a buyer has signed an arm's length agreement with the short sale bank, there can be no secret arrangements or rent-backs without full disclosure to the short sale bank. Violation of an arm's length agreement could be considered mortgage fraud, and buyers who have questions about this should obtain legal advice.
You also need to ask your agent for advice. If your agent is unable to give you advice, ask your agent's broker for advice.
Lyon Real Estate
Sacramento Short Sale Agent
Lyon Real Estate is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.
You should not be dealing with the listing agent and unless you foolishly allowed them to act as your buyer broker as well. This is known as "dual agency" and as your learning you have no real representation. If you have a separate buyer broker they should simply tell the listing agent to go pound sand that the seller has no options and must be out of the house on the agreed upon date. If you don't have a buyer broker who is capable of doing their job and taking are of business for you, then I would suggest speaking with an attorney. I would also tell the listing agent that you will not be allowing the Seller to stay, don't want to hear another word about it, that you will be filing a complaint with the California Real Estate commission against them if they don't get their seller out of the house and that both they and the seller will be hearing from your attorney shortly.
Sounds to me as if the seller has some problems (not yours) and that the listing agent is either a moron or related to the Seller.
If you havenâ€™t' signed any documents allowing her to stay, tell the listing agent she and all of her stuff must be gone on the day of closing and that you will be doing a walk through prior to closing and expect the house to be in perfect condition or that you will demand that the closing agent escrow money form the Sellers proceeds to correct any damages.
If you close on this deal with the current owner still in the house and not planning an immediate exit, you become a landlord and they become your tenant. Read the landlord tenant laws for California and consider this carefully.
One week has become two, what are the chances they will want three, four, six...? Is this a short sale? If so, you may not be able to close and rent to them without committing fraud. Most banks won't approve a short sale under these conditions. If it's a regular sale, try to avoid it at all costs. You should at least collect your carrying costs if they stay the week; you are paying the mortgage from the day the house closes.
Itâ€™s nice to be kind, but this could easily become a nightmare, tread very carefully and consider getting legal advice before you make any final decisions.
Assuming that it contains no such request for her to overstay the closing, it's been my experience that a buyer doesn't have to allow a seller to do that. A seller once threatened to cancel the sale, because I wouldn't let her have her way on a similar issue. My title agent informed me that RESPA protected me in the matter, and guaranteed me triple damages had the seller tried to force the issue. My attorney affirmed my title agent's comment, and expounded on it.
Have an attorney review your P&S, and advise you accordingly.
You can require an escrow at the closing. The seller will place X amount of money into an escrow account in case there is any damage in the week or two that they stay in the house.
You start paying for the home the day you close on it so it makes sense that the seller should pay you rent. If they stay for two weeks, that is half a mortgage payment plus half the taxes for the month.
Most agents and buyers/sellers don't like to do this because of all the questions and liability concerns. It would be more acceptable to change the closing date by a week or two.
Hope this is of some help.
Prudential Patt White Real Estate
Lehigh Valley, PA