Seller Stays 30 days after closing!!!!!????

37 Replies

So my brother is buying his first house in Northwest Ohio.  He is suppose to close next week and was telling me that their contract with the seller stipulates that the seller can stay in the Home for up to thirty days after closing...  I kind of freaked out for a bit and he called his realitor and she said this is "normal in their area and happens all the time" 

The sellers are an older couple and have TONS off stuff and need time to move out... they have not started moving at all yet even though they have had a contract for 45 days now.  

Is it just me or could my brother be in for a mess!   Is this actually normal?

It's normal.....if you can get a buyer to go for it.  Apparently your brother did go for it as he signed the contract.  Trouble with long-time entrenched owners (and tenants) is that they are often delusional about what they can accomplish.  Or where they are going to go.  Or both. The other problem is that if they don't leave, you end up dealing with them through the courts.  It's not like the police come and say "your time here is up".  I'd never let a former owner stay without  a specific rental agreement for that 30 days.  I'd never let someone stay in possession of my house without having everything lined up so I could start eviction if I needed to.  

I'd not close on that house unless the sellers signed specific rental agreement for the 30 days.  There would be a deposit, there would specific terms regarding vacating and removing personal property.  But that's me and because I learned it the hard way

From your post, I presumed that this is for a primary residence for your brother? I only did this once, and it also was going to be a primary residence for me. I didn't let them do it for one reason:

The couple would be living in the house on my insurance, which was for owner occupied, and here I was using it as a rental. For this reason I said it wasn't worth it to me for the risk exposure. And I doubted I could get a 30 day policy, or that they could keep their insurance policy when the property was now in my name, etc. I just said "too complicated, nothing to gain for me, sorry". 

Maybe everything works out, or maybe 30 days becomes 45+ because their new apartment isn't ready. . . . 

Just make sure your brother isn't exposed on the insurance aspect.

@Joshua D.   No. This is not normal...it is downright frightening. Not to mention a really bad decision. But you can't undue what's done. I have seen this happen before, and it is simply the failure of the realtor to protect the buyer. Live and learn I suppose...hopefully nothing bad happens.

Brandon Sturgill, Real Estate Agent in OH (#2015001666)
614-379-2017

I have done it for a great price or in a competitive market. Yes I would get a rental lease signed plus deposit and market rent just like any other renter. Get everything on paper is the key. I don't think it is unheard of for people selling their primary. The sellers don't want to start moving until they know for sure the house is sold. Why Has it taken 45 days under contract and not closed? Are there any issues with financing? Those are the things the current owners might be worry about.
At lease it wasn't a contingency for the purchase of their next home. That could take forever.

It all depends on if there's a leaseback clause in the contract with an actual lease or not.  I agree I would never let someone have possession of my house once I bought it without the proper leaseback agreements in place.

All that said, I don't think it's all that uncommon to have a leaseback situation in a contract for a house sale.  I've known several people who have done it themselves and we are doing one next week.  We are closing on Monday, and leasing our house back from the buyers for the rest of the week so our son can finish his last week of school, then movers are coming Saturday and we're out Sunday, they are in Monday.  I'm bringing a certified check for $600 or something for the leaseback and will have to sign some paperwork (basically a super short term rental agreement.)  Usually these things are just for a few days to vacate if it wasn't possible to vacate prior to closing (because you need the closing funds to close on your destination home, for example.)  The full month after closing does seem long but it can be whatever length you agree to.

Thanks everyone for you input!  This is a house for my brother to live in.  I encouraged him multiple times ask his Realtor to make changes to their contract.  

There is no Rental agreement,  the people will stay for free for 30 days on my brothers dime.  

Therefore there is no renters specific insurance... putting my brother at risk.  

And there is NO guarantee or recourse for my brother if they do not move out in 30 days. How can a Realtor make this contract, representing a buyer?  How can my brother sign such a bad contract for him?  

What has my brother done. 

I am not familiar with Ohio.... but I am a broker in 2 states and it is quite shocking that this was not brought up before.  I put it in my clients contracts that if the seller does not surrender the property on the closing day the fee is $100 a day.  Once we had a seller need to stay and made them sign a lease and pay rent.  But it was a triplex and the buyer was moving into a vacant unit

If this is a normal occurrence in the area the agent should have explained this and made sure your brother understood that the contract allowed for it.  

Brie Schmidt, Real Estate Agent in Wisconsin (#57846-90) and Illinois (#471.018287)

Texas specifically has this in the contract and uses a specific form for sellers who are staying in the property for up to 90 days after closing, so you should see if your brother's contract has similar.

10.POSSESSION:

 Buyer’s Possession: Seller shall deliver to Buyer possession of the Property in its present or required condition, ordinary wear and tear excepted: 

A) upon closing and funding or 

B) according to a temporary residential lease form promulgated by TREC or other written lease required by the parties. Any possession by Buyer prior to closing or by Seller after closing which is not authorized by a written lease will establish a tenancy at sufferance relationship between the parties. Consult your insurance agent prior to change of ownership and possession because insurance coverage may be limited or terminated. The absence of a written 

Texas sellers temporary residential lease: http://www.trec.state.tx.us/pdf/contracts/15-5.pdf

Found this on the Cincinnati Area Board of Realtors website (http://www.cabr.org/legal-matters/realtorlawyer-cmte/the-purchase-agreement):

Possession and Occupancy

This clause identifies the date that the seller will vacate the property and what obligations/rights the seller has with regard to utilities, rent, and condition of the property after vacating. It is important to remember that a change in closing date can affect the ability to provide/accept occupancy as indicated in the original purchase agreement. If there is a change to the closing date, the occupancy date must also be reviewed to determine if there is a need to also make an amendment to that date. Failure to do so could cause a seller to have to vacate the property in less time after closing than he/she had planned. Or, it could leave a buyer in a "homeless" situation, if they needed to have occupancy by a specific date. There is no set rule as to when occupancy must be granted. Some sellers provide occupancy at closing. Others need time to facilitate their own move and may request several days, a month or even longer. The amount of time a seller will have to occupy the property after closing is negotiable between the parties.

@Joshua D.  

As a Cincinnati resident and investor, I can tell you that this is quite common due to the long standing practice of German heritage in Ohio. I can also tell you that it is normal for the seller to pay for title insurance for the sale. Starnge but true.

we all investors know a deal is never done until the closing is done and the check (or wire) hits or clears the bank. So would you move out of a house without money and then if it doesn't close you are without money and a place to sell. Its fairly common, that said I usually have a deposit held either by me or sometimes title company if they agree to.

@Joshua D.  

This is an odd occurence as far as the Southeastern Pa housing market anyway(I've never heard of it happening here) but please keep us posted on the outcome, especially if your brother decides to go through with letting the seller stay as renter (or squatter with a heep of your brothers money, wow! ).

Is this an all cash purchase or is your brother getting a mortgage?

In Pa the agents are not to alter the contracts aside from contingencies specified by their client. It may be necessary to contact a real estate attorney in OH.

Kudos,

Mary  

i let the Seller of my 2 on 1 stay for 90 days. They were looking for flexibility on possession as much as they were looking at selling price. Worked out well and I am glad that I did it. Actually ended up renting them (after the 90 days) my 2000 sq ft detached garage on the same property for $1,000/ month for 5 months. 

Originally posted by @Ron Drake :

i let the Seller of my 2 on 1 stay for 90 days. They were looking for flexibility on possession as much as they were looking at selling price. Worked out well and I am glad that I did it. Actually ended up renting them (after the 90 days) my 2000 sq ft detached garage on the same property for $1,000/ month for 5 months. 

I'd do it this way too.  But the owners would have to qualify as tenants.  I've bought a lot of properties from people who would never qualify as anybody's tenants.  My biggest mistakes to date were assuming that the sellers would have income from seller carry backs we created.  Hence they'd have money and resources to pay rent and/or move.  HUGE mistake.  And I did it more than once.  One seller got a $10K downpayment and it disappeared into one of her boyfriend's drug deals within a week.  Oh, and he left her too.  So my brand new "tenant" has no money and no one to help her move.  Don't get me started on the owners with too much stuff, that are actually hoarders.  No amount of money will solve that problem.

I did it when I sold my primary residence in Texas but made the lease-back part of the contract. I was moving out of state and was not sure that the buyers (spotty credit) would close. I also did not have a house locked down yet in the new location.

No big deal. Happens all the time. I kept full insurance coverage on the house.

Bad idea! I just closed on a house and the sellers wanted to stay 7 days to get the stuff out because they needed money from the sale. The day before closing chandeliers were stolen along with other items (inside job). I can only imagine the problems if I would have agreed to 7 more days.

The seller wrote me a check to cover the stolen items and damage.

I am surprised that this is such an uncommon occurrence. When we sold our house and buying new construction, there were delays and we wouldn't be able to move in until about three months after our settlement. We explained the situation to our buyers about a 90 day lease paying above market rent, due to the inconvenience, and they accepted rather quickly. It was a young couple moving out of a parent's house, so I guess the extra 90 days didn't bother them much. We had no issues.

If a buyer wants to move in early or the seller stays late that's fine but everyone has to agree and somebody has to pay. Use the forms provided by the state or write it specifically in the contract what is supposed to happen and what happens next if it doesn't. Real estate is a business not a charity. The agent works for your brother, if the agent is not doing what he asks then he needs to get a new one. Agents like to do what "they" cusotmarily do because it is easy. Good luck trying to customarily evict someone.

Is your brother getting a loan that requires him to be an owner occupant?  If so, do the loan docs require that he occupy the property within some period of time?  If he is unable to occupy the property in the stated period of time, he could face legal issues on his side.  Just something to check into, and another reason he would need to be certain he could get them out quickly if they chose not to leave on their own.

Personally, I'd never let a seller stay in a property unless I was planning to do a major rehab, as there is very little recourse should the property not be left in good condition when the sellers leave.

If someone is still living in the house also you can't see any unknown damage with all the stuff there.

With the owners vacating before closing you can see it in it's empty state with a final walk through.

I have seen owners pushing TV's on wood floors before and scratching to h%ll and back. You want to negotiate if they do such things before closing. The property per the contract generally says it has to be in the same material shape or better at the time of going under agreement right up to the closing. 

I've seen this MANY times over the years, and don't think it's uncommon at all. As @Nazz Wang  mentioned, the sellers probably wanted to make sure the deal was going to close before they started putting out deposits, scheduling movers, etc. Usually the rent is pro rated and it's paid to the buyers through escrow when it closes. I think you're stressing your brother out over what probably is nothing @Joshua D.  . 

Thanks everyone for your great thoughts! 

Called my dad last night to see if he could help talk to my brother, And my dad told me that both the last two houses he bought and sold the sellers stayed 30 days after closing!  Apparently it is more normal. 

But just because something seems 

@J Scott My brother is getting a conventional owner occupied loan, I did not even think of those ramifications.  Good point. 

@Joel Owens  Thanks good thoughts! 

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