Congratulations! Your seller clients have sold their home, and the buyers are ready to take possession. But first, your clients will need time to move out.
Your clients can lease the home they just sold to the buyers for up to 90 days. This is often called a lease back or temporary lease that can be negotiated as part of the sales transaction.
Use the Seller’s Temporary Residential Lease (TXR 1910) to set the terms. Rent is calculated on a per day basis and paid in full at the time of the funding of the sale. Rent can be set to $0, as the consideration for the sale of the home can be serve as consideration for the temporary lease. A deposit is required.
Depending on how the buyers funded the purchase, your sellers may not be able to lease for the full 90 days. Some lenders limit temporary leases to 60 days or less per their underwriting requirements, and these limits are usually evidenced by the deed of trust that the borrower/buyer signs at closing. Agents should not draft their own deeds of trust as that could be considered the unauthorized practice of law.
You may want to advise your clients of these potential limitations, as they may need to consider alternative options after closing. If your seller clients know they will need a lease back, suggest that they include that information in the MLS listing, so potential buyers can consult with lenders to determine lender requirements before submitting an offer.
Why is a deposit required? I have had clients pursue small claims actions against the other party three times in my career because the seller provided a deposit as part of the leaseback and when the landlord/buyer closed on the property they refused to return it. In each case refund was required. One refusal was because the seller did not professionally clean the home but did leave the home in- broom swept condition. A professional clean was not offered as part of the contract, but regardless of what the contract stated, or what the buyer’s broker advised, the buyer refused… Read more »
I’d like an explanation of why this says “A deposit is required.” I do not believe that is accurate.
In this seller’s market, I’ve seen so many temporary leases with zero daily rent AND zero for the deposit. We should all start pushing back and requiring some type of deposit.
I teach my agents to always negotiate a deposit – normally a minimum of $500 to ensure that the seller does leave the property in decent condition. If professional cleaning is negotiated it should be stated in Special Provisions of the Temp Lease. I don’t know of any deal where the buyer/owner didn’t refund the deposit upon possession.
I would also like to know what legal reasons for a deposit to be required. I’ve never heard that requirement before in any of the contract and legal classes, and I’ve been a full-time professional real estate agent for 22 years. It seems like it’s really hard to get it back from the buyers, unless the buyer’s agent holds on to it.
I’m the buyer in this situation. I did receive a $500 deposit for a lease back. Upon arrival to our new home there were many issues with the house. I’m not sure if I’m entitled to keep the $500 deposit. There was dog poop in the back yard (at lease 7 piles) and yard was infested with Army worms, and grass was tall in one side of the front yard. The water line to the refrigerator was left dripping so water had been dripping for a couple of days so the wall was wet and soft and water stained. Every… Read more »