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Seller wants max 60 days after closing before possession.My real estate agent says it's very common.I am concerned about the liability and damage. Any input is greatly appreciated.Thanks.
That sounds nutty. You own the house, but the previous owner gets to live in it? Are they going to pay rent? How about a security deposit? How about insurance? I believe any mortgage company requires you have insurance in effect at the time of closing, so you are paying to insure the house while they live in it? Are you going to require them to take tenants' insurance? Will your homeowners policy even permit you to rent the house? Do you have a rental contract with them?
Sounds like you need to delay closing until they are out, like 99+++ % of all house sales do.
I don't know the current "rules" for mortgages, but in the past you needed to be living in the home within a certain time frame for a residential mortgage. Check with your lender.
I don't know the current "rules" for mortgages, but in the past you needed to be living in the home within a certain time frame for a residential mortgage. Check with your lender.
Have your attorney write the lease if you proceed.
Agree, and I've also had experience that 60 days was the max allowed by a lender, but I'm guessing all may not be the same.
In our market, which has been great for sellers & tough for buyers the last few years, this has become a little more common. The sellers want to sell, but know they are going to have trouble finding a place, so this gives them a little flexibility & cash in their pocket. So when they find the home, they're able to put in an offer with no home sale contingency.
The transactions I've had where this was used successfully consisted of sellers who needed that additional leverage, and buyers who had been dealing with a very competitive market and were willing to allow it just to get the house.
But yes, attorneys wrote up the "Use & Occupancy" contract & spelled out all the terms, including insurance requirements for both sides, who pays what to whom & when, and the date by which the contract ends. I believe they also included a hefty penalty if the seller did not abide by the terms, but don't remember the exact language.
Seller wants max 60 days after closing before possession.My real estate agent says it's very common.I am concerned about the liability and damage. Any input is greatly appreciated.Thanks.
It's not common where I live. You didn't say where you live.
Yes, you should be very concerned about liability and damage.
You might consider this if you have only a single offer after a while on a difficult to sell house.
It isn't common, but it isn't unheard of either. You would have to get landlord insurance for that time period, and you should have a written lease, prepared by your attorney. You should require the seller to get renter's insurance. You should also check with your lender to make sure it isn't a problem, as others have said.
If all of that checks out and you are willing to do it, then you collect the maximum security deposit allowed in your state. If your state doesn't have a max, I'd suggest two month's worth of rent for deposit, which should be enough to cover eviction proceedings if they don't move, as well as a month's rent with a little left for municipal utility bills they didn't pay, since those wouldn't be settled at closing like they usually would be (although I would still want title (or attorney if it is an attorney close state) to verify that municipal utilities were current at time of closing and not behind and on a payment plan.
They should expect to pay over market rate for rent.
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