Home Buying in Plano>Question Details

Pj, Home Buyer in Dallas, TX

we are doing a leaseback on the home we are buying and on the agreement it says the sellers will pay us the

Asked by Pj, Dallas, TX Tue Mar 31, 2009

full amount of rental for the term of the lease at the time of funding. how does this happen. Does the seller usually just cut a check at closing? Or can the rental funds be given at closing by the title co? The rental will be about 70 days in our case @ $145/day. Thanks.

Help the community by answering this question:


All transactions between buyer/seller must be disclosed to the lender.
1 vote Thank Flag Link Wed Apr 1, 2009
This is usually given to you as a credit at the time of closing. Actually, you should insist on it so you don't get stiffed. They can either giver you a cashier's check or ask the title company to add it to the HUD1 as a credit.

This should have been handled by your agent in writing. Don't make any verbal agreements.

Good luck,

Web Reference: http://www.SumnerRealty.com
1 vote Thank Flag Link Tue Mar 31, 2009
It depends on the title company.

I am with you that I like the funds collected from the sellers proceeds at closing/funding and on the HUD.
This includes both deposit and rent.
Some title companies will do this, some wont.
My guess is they don't like to do it, but I insist, and normally it is not an issue.
Some sellers also like to try to cut separate checks. Personally I don't want to deal with anyone's checks.
If they're going to cut a check, then there shouldn't be any problem putting it on the HUD and collecting at closing.
Some seller's think you shouldn't cash their deposit check and just keep it on file and tear it up if they move out on time and leave everything in good condition. Again.....I never want to see this and want it deducted on the HUD. People get funny about these things and I've seen checks get voided before. It's just not worth going to court over $500 or whatever the deposit is to me.
I just had an agent tell me she's never done a leaseback with a deposit.
My answer is I've never done one without.
People get busy when theyre moving....they forget to clean up, they get the power turned off early and can't clean up, they forget to mow the yard, they forget to take out the trash, they forget to leave remotes, they forget to leave keys...and on and on and on.
Lesson learned....get a deposit that makes sense...and get it at closing on the HUD.

The only exception to this might be if your lender doesn't like it. Typically this leaseback cannot be part of your downpayment. If you need 20% down for your loan...then you need to put down 20%, not including the lease....perhaps you can take that off closing costs. I'm guessing $145/day for 70 days, none of this will be an issue for you, but you can always check with your loan officer to make sure.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Wed Apr 15, 2009
Bruce Lynn, Real Estate Pro in Coppell, TX
Nicole Arenas
Real Estate Pro
Dallas, TX
PJ, regarding your 2nd question in the conversation stream, It is possible to draw up an(other) amendment to the lease addenda on your leaseback agreement stating the terms, at this stage into the transaction. In this amendment, it could include when/how the lease will be paid and have it signed off by you and the seller leasing back the property for the 70 day time period. Are you taking advantage of a Realtor to represent you on the buy side? Some people even get a deposit refundable upon a clean move out and some even state that the carpet and house will be left in same condition as is in the walk through. If your not using a real estate expert, your title company could likely help, just as you said he offered to do for you. I doubt the seller's leasing from you will baulk at it. Details are vague because this is typically something addressed before final execution of the documents. Hope this helps?! Click on my name to see my contact info if you want help here on out.
0 votes Thank Flag Link Thu Apr 2, 2009
If you have the form already, then it's already part of the contract. You cannot make changes to the actual 8 page document once it's executed. That is what amendments are for.

That addendum has fields that highlight how and when you will be getting paid. The funding would not happen until the title company has good funds from the seller to give to you.

0 votes Thank Flag Link Thu Apr 2, 2009

If you don't have a realtor, contact one of these people.
Maybe the TREC can be amended.

I don't believe that the TREC cancels your other contract unless it specifically addresses that lease agreement..... So you should be safe.
0 votes Thank Flag Link Wed Apr 1, 2009
we do have that Seller's Lease Agreement filled out and signed but the language of it seemed a bit vague. I tlaked to title co. guy today and he said he'd set up settlement statement so that I am disbursed the full rental amount plus deposit on closing day or next day when "funding" officailly occurs.
I just wish it specifically said that on the TREC form.
0 votes Thank Flag Link Wed Apr 1, 2009
As Tom said below, all transactions must be disclosed to the lender. You will have to sign a document at closing stating that there are no undisclosed agreements between you and the seller.

As long as you haven't closed yet, I strongly urge you to get your ducks in a row and get your Realtor to draft a temporary lease. It is a form promulgated by TREC (Texas Real Estate Commission) for this exact purpose.

0 votes Thank Flag Link Wed Apr 1, 2009
When buying a home and offering the seller's a leasback, they then get to lease your home for the specified terms which are negotiable and become a part of the contract. Then the contract must be adhered to. The seller can pay the fee for the lease back rent through credit to you at closing or through a check, with my clients I always advise and ask for payment at the time of closing to avoid any problems down the line with your getting your money. If I can be of real estate assistance, I can be contacted at: nicolearenas@ymail.com
Nicole Arenas, Realtor
Dallas, TX
0 votes Thank Flag Link Wed Apr 1, 2009
If there is a temporary lease attached to the contract the leaseback would be disclosed to the lender, they just don't have to get involved in the HUD-1 approval of the monies. If you haven't closed you can still have your realtor request that the funds be provided to you in a cashier's check to insure good paymnet. You can still do an amendment to the contract that states that the monies be applied at closing and get the seller's to sign. Just check with your lender and make sure they have no issues with it being on the HUD 1. It's not too late if you haven't closed.
0 votes Thank Flag Link Wed Apr 1, 2009
we've already executed the contract and in hindsight i guess under "special provisions" we could have written that funds are due at closing to be applied to closing.
our agent said most sellers just pay by check - kind of vague. i guess i should have insisted on stronger language in the TREC form.
0 votes Thank Flag Link Wed Apr 1, 2009
In some cases the title company will add the amount to the closing cost statement (called HUD1) by charging the seller the costs from their proceeds and then applying the proceeds to your costs. However, to avoid getting the mortgage company and the title company involved most of my clients handle rental leasebacks separately. You should have a valid temporary lease agreement signed as part of the contract so you have a legal basis for this transaction. YOu should check with your realtor and get their advice, but usually I have the sellers bring a cashier's check for the amount and I make sure my clients get that check in their hands before all the final papers are signed.

0 votes Thank Flag Link Tue Mar 31, 2009
Expect scrutiny, but if this is spelled out in the contract, then this can be transferred thru title company to be applied to closing/down payment.
If you are purchasing a $150K home, I would suspect the underwriter to call it fraud(getting around loan guidelines). As it would be well above normal rent. If the rent is a little more in line with the purchase price, then you will get less resistance.
Also, you will need to prove that you had the money to pay that $145 per day.
0 votes Thank Flag Link Tue Mar 31, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Home > Texas > Collin County > Plano > Home Buying in Plano > Question
Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer