You’re ready to sell your home – but you have a problem: You need the money from the sale to set up in a new place.
Since many homeowners have the vast majority of their money tied up in their property, this isn’t an uncommon issue. Even if you intend to rent, it can take time to find the right place and get moved out of the old home and into the new. If you’re buying, getting closing dates on the old place and the new to match up can be a nightmare.
A rent-back agreement with your buyer can solve your problem. They’re becoming increasingly common in many purchase agreements, and they basically allow you – as the seller – to remain in the home as a renter for a specific period. During that time, your buyer becomes your landlord.
What goes into a good rent-back agreement?
A solidly crafted rent-back clause will address all of the major issues that might come up, and look much like a short-term rental agreement. It should include:
- Start dates and maximum end dates (which can range from days to months)
- Any provisions for an extension and conditions that might apply
- The rental amount and any necessary security deposit that you must pay
- Responsibilities for necessary repairs, maintenance, lawn care and utilities
- Insurance requirements, which usually includes the need for renters’ insurance
- A list of consequences for defaults on rent or failure to vacate
- An agreement on how the rent-back arrangement can be terminated early
Rent-back clauses can be a practical solution to a tricky problem, but only if they’re done right. Legal guidance can make it much easier to keep your real estate transaction on track.
