Rent-Back Agreements: Pros And Cons For Buyers And Sellers

Apr 21, 2024

6-minute read

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A street in USA, lined with trees and houses in full bloom.

If sellers need time to move out or find a place to live after they sell their home, they may be able to buy some more time through a rent-back agreement. The buyer allows the seller to pay rent and stay in the home as they prepare to move.

Whether you’re buying or selling, rent-back agreements can be a win-win for both parties. This rental arrangement can bridge a gap in a seller’s moving timeline and generate extra income for the buyer.

What Is A Rent-Back Agreement?

A rent-back agreement is a temporary lease agreement between a home seller and home buyer that allows the home seller to rent the property from the buyer after the closing date.

Sometimes called a “sale and rent back,” “sale-leaseback” or a “post-settlement occupancy agreement,” a rent-back agreement is usually a short-term deal often used when a seller encounters a delay in finding or moving into a new home.

Under certain market conditions or unique situations, some agreements can extend for weeks or months, such as:

  • Example 1: You’re building a new home, and your contractor informs you that they’re experiencing a labor shortage and don’t have enough workers to finish construction on time. Because of the construction delay, you would likely need more time at your property.
  • Example 2: You have several school-aged children, and you want them to finish out the year at their school. A rent-back agreement can give you the extra time to keep them in their current school until you move.
  • Example 3: You’ve received an offer on your home but haven’t made time to work with a real estate agent and find a new home to purchase. A rent-back agreement can give you extra time to find a new place to live.