Rent-Back Agreements: Pros And Cons For Buyers And Sellers
Author:
Miranda CraceApr 21, 2024
•6-minute read
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.