sellers want to rent back short sale house I bought in Phoenix can I rent back to them

Asked by Betty, Phoenix, AZ Fri Oct 8, 2010

Help the community by answering this question:

+ web reference
Web reference:

Answers

10
Maria Morton, Agent, Kansas City, MO
Fri Oct 8, 2010
This was a question we discussed at great length in a continuing education class here in Kansas City. Here are some things to think about:
1. Will the bank view this as fraudulent activity? [Consult a local attorney].
2. How will the previous owners behave as tenants? Is there a possibility that they might feel as if it is still their home and be difficult tenants?
3. The previous owners defaulted on their mortgage with a bank. Will they pay you in a timely manner? Are they able to pay the amount of rent you are looking to get?
4. If you do rent to them and later have to evict them, are you prepared for that contingency?
5. Are you prepared to do your due diligence in qualifying a tenant prior to signing a lease agreement with them? If so, will these potential tenants pass your screening process? Will they be the best tenants you can get for that property?
6. Are you going to find the tenants and maintain and manage the property yourself or are you going to hire a property manager? If you hire a property manager, what is their policy in this circumstance?
7. Is the property in your name or an LLC? Is your name and home address on the legal and tax records that can be accessed by anyone?
Web Reference:  http://www.mariasellskc.com
1 vote
Scott Godzyk, Agent, Manchester, NH
Fri Dec 24, 2010
The biggest thing is what type of mortgage are getting, if you are getting a owner occupied mortgage, then you have to occupy or you will be in default. The other thing is if you did get an investment type mortgage, they you could, but if they couldnt pay their mortgage how are they going to pay rent? you should due your due diligince as you would any other tenant you be putting in a property. If you purchase with the in it, you will be responsible for teh cost if you have to evict them and any damage that occurs during the move out or anything they decide to take with them.
0 votes
Dallas Texas, Agent, Dallas, TN
Fri Dec 24, 2010
Depends on your loan, are there any restrictions.

If no you own property do what you like

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes
Jeff Star, Agent, glendale, AZ
Fri Dec 24, 2010
This happens all the time, some banks make the buyer and seller sign a "arm length affidavit" pretty much stating that you cannot rent or sell the property back to the seller. In my opinion I think it's complete BS that a bank can dictate what you buy or rent after the transaction is complete. Why should they care whether it's the seller or someone else renting the house in the future. It is a negotiated transaction and not a foreclosure. Many people would love to do short sales and stay current on their monthly payments, but no bank will do a short sale while the homeowner is current.

Jeff Star
RE/MAX
0 votes
Jeff Star, Agent, glendale, AZ
Fri Dec 24, 2010
This happens all the time, some banks make the buyer and seller sign a "arm length affidavit" pretty much stating that you cannot rent or sell the property back to the seller. In my opinion I think it's complete BS that a bank can dictate what you buy or rent after the transaction is complete. Why should they care whether it's the seller or someone else renting the house in the future. It is a negotiated transaction and not a foreclosure. Many people would love to do short sales and stay current on their monthly payments, but no bank will do a short sale while the homeowner is current.

Jeff Star
RE/MAX
0 votes
Kevin Olson,…, Agent, Colorado Springs, CO
Fri Oct 8, 2010
Thumbs up for Maria's answer! Those are all things you really need to consider before proceeding. It's a nice thought, but can be a very harsh reality.
0 votes
Don Tepper, Agent, Burke, VA
Fri Oct 8, 2010
Excellent answer from Maria. All those are things to consider.

And I'd add one additional item: If they do default as tenants, are you prepared for them to go into court and argue that you'd actually agreed to sell the home back to them? You haven't, and unless they forge some documents, they won't be able to produce any proof. But that's an awfully powerful argument and you might find yourself in really big trouble.

It's your house, so you can if you want to. But whether it's in your best interest is another matter.
0 votes
Bill Eckler, Agent, Venice, FL
Fri Oct 8, 2010
Anna's correct about the "Arms length" concern. The best source for this information is likely going to be an attorney.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Fri Oct 8, 2010
Generally when the deal is closed and you are the owner, you can do as you please--however, for an accurate answer consult with an attorney who specializes in real estate--was there an arm's lenght affidavit and if so what did it state, was the property purchased as a primary residence or investment, etc. What is your agent suggesting.....
0 votes
Joe Lanzilot…, , Orlando, FL
Fri Oct 8, 2010
Certainly if you closed on the home it is yours to do as you wish. If you "financed it" as an Owner Occupied property that would be your only setback in my opinion.
0 votes
Search Advice
Search
Ask our community a question

Email me when…

Learn more