HELP!! is this Normal or Abnormal? Seller stays after closing?

23 Replies

The day has finally arrived. We have been waiting for weeks to get mortgage approval for our first rental property and will close on tomorrow.  I have the cashiers check for the down payment and I am ready to go to title company tomorrow, however, my Realtor informs me that we will not actually get the keys tomorrow because the owner requested a few days "5" days to pack and move. Is this normal??  Originally, the Realtor said the owner wanted to lease back the property after closing but then she explained that there is no money involved in a lease back but it is a courtesy to allow time for owner to move. 

No keys?  and No money on a lease back? Is this normal? 

Not really normal, but it does happen sometimes.  What does your purchase contract say about "possession"?  Normally that says "at closing", which means you get the keys and the place at closing.

The risk is that as soon as you close with the sellers there, you are a landlord and they are your tenant.  Five days could turn into ten, then into five weeks...

If you contract says possession is five days after closing, you're stuck.  If it says possession at closing, I'd push back.  Specifically, I'd push back closing by five days to give them time to get out.

Jon Holdman, Flying Phoenix LLC

Agree with Jon, some people just delay and don't plan well.  Push back closing, or hold back $5-10k.

I agree with everyone above.  If you or your agent used the standard TREC contract look at section 10.

@Rhondalette W.

This is absolutely abnormal if you don't have a written document allowing such an arrangement, and if your agent isn't aware that you have been placed in a precarious position, she needs additional training. 

As is stated above, the contract stipulates when possession is transferred. If your contract doesn't stipulate there is a temporary lease, you get the keys at closing and the seller must have vacated the property. 

I could go into any number of horror stories involving this very issue but suffice it say, you better get legal counsel involved since it appears you're unsure of your contractual rights and obligations and so is your agent.

Guy Gimenez, Buying Texas Today | [email protected] | (512) 270‑7279 | http://www.BuyingTexasToday.com

Originally posted by @Shawn Thom :

I agree with everyone above.  If you or your agent used the standard TREC contract look at section 10.

Thank you for directing me to section 10 of the contract. 

I sold my home about 5 years ago and "rented" it back for one month to allow enough time for me to pack for an out of state move. So, at closing the seller had to bring money for closing MINUS one month rent. It worked out for both of us. I even allowed them to come in and do some repairs during the rental period.

excuse me I meant buyer not seller.

ok, it's late. but bottom line is that the buyer brought less money to the table at closing and I received less the $1000 for the rent at closing. this was part of the contract and the title company handled it.

Tell your realtor that you won't close unless you get the temporary lease added.  

https://www.trec.state.tx.us/pdf/contracts/15-5.pd...

You should be getting a per diem because what if the seller takes a month or more to move.  The temporary lease protects you.  You could put your foot down and not close until the seller is moved out.  However, reading between the lines, the seller may need the money from closing to move.  That isn't uncommon.  Also, you need to get renter insurance policy right away, but since you are going to rent the place out, that is something you'll want anyway.

More often than not these situations do not end well. The seller might have the best of intentions to living up to their end of the agreement but life throws unexpected curve balls.

I would read your contract and see as mentioned what closing possession the seller has agreed to.

If they want to change that agreement it is up to you to accept or not accept it but the sellers do not get a free ride for that and proper arrangements have to be made.

Your agent you have to watch some of them. They will blow over issues as minor to close because they want that commission check. Anything in the way as a roadblock to getting that commission check they will try to talk around it. 

Medium allworldrealtyJoel Owens, All World Realty | [email protected] | 678‑779‑2798 | http://www.AWcommercial.com | Podcast Guest on Show #47

It does happen, but I always choose possession on closing.  If they need more time, we can extend the closing date if necessary.

Adrian Chu, Adrian Chu & Associates | Horizon Real Estate | [email protected] | 2064075452 | WA Agent # 107768, WA Lender # MLO-920749

i agree with all comments 
my personel opinion i would extend the closing
good luck @Rhondalette W.  

Don't do it without a temporary lease with escalating fees. Talk to your lawyer about the arrangements, you relator is just trying to get you to close.  There has to be a consequence for not moving out so even if you give a few days without fee a per diem should start after that.  Besides normally there is a walk through to make sure they took all their stuff so I would also add a fee for  if they move out but they leave possessions behind.

Yeah, I've done this a time or three and plenty can go wrong.  Good advice above on a holdback and lease.  Under no circumstance should you just give them a few days to get out...If the deal is good enough I personally wouldn't push closing because around here its harder to find a good deal than to deal with evicting someone, but you need to know the risk and protect yourself.  A quick lease with a per diem and a cash holdback at closing they get at move out will do the trick I'd think.

Not sure of your sellers, I used to work the pre-foreclosure market pretty hard and people do weird things when they are cash strapped, or after you solved their problem and then they discount the value of what you did for them after the fact.  The walls get beat up on move out, they spill something on the carpet and dont care because its not theirs anymore, they decide you owe them the nice fan in the living room, etc.  Really depends a lot on the quality of person the seller is, but its not like you have a credit app and background check to work off of, but if you've got some money and a written agreement its not anything I'd lose sleep over.

Originally posted by @Darla Holtzclaw :

Tell your realtor that you won't close unless you get the temporary lease added.  

https://www.trec.state.tx.us/pdf/contracts/15-5.pd...

You should be getting a per diem because what if the seller takes a month or more to move.  The temporary lease protects you.  You could put your foot down and not close until the seller is moved out.  However, reading between the lines, the seller may need the money from closing to move.  That isn't uncommon.  Also, you need to get renter insurance policy right away, but since you are going to rent the place out, that is something you'll want anyway.

 Darla, thank you for sharing this agreement. What a great learning experience this is for me. 

A leaseback requires an addendum to the contract in the state of Texas. In the leaseback addendum, it provides compensation to the buyer from the seller as consideration. It allows the buyer (lessor) to inform the seller (lessee) how much per day they will be charged for the duration of the leaseback, which is credited on the HUD statement at closing. If the contract has no leaseback addendum, and Section 10 is set as possession upon closing and funding, there is no leaseback.

Hope that helps!

Originally posted by @Michelle Fourcand :

A leaseback requires an addendum to the contract in the state of Texas. In the leaseback addendum, it provides compensation to the buyer from the seller as consideration. It allows the buyer (lessor) to inform the seller (lessee) how much per day they will be charged for the duration of the leaseback, which is credited on the HUD statement at closing. If the contract has no leaseback addendum, and Section 10 is set as possession upon closing and funding, there is no leaseback.

Hope that helps!

 Thanks Michelle, there was a leaseback addendum but realtor entered $0 said it was a courtesy to allow time for seller to move. It was my first rental deal and have learned my lesson. It seems that my realtor was more concerned but making the deal than helping me (the buyer). I am wiser as a result. 

Sorry that happened! Good luck on your investment and best wishes :)

@Michelle Fourcand Michael S.

I just wanted to say thank you all for you advice on the seller who wanted to remain in the home 5 days after closing. I am pleased to report that the seller moved out on yesterday and I officially took possession. To my surprise the seller left the refrigerator, washing machine, Hoover vacuum cleaner, a jar of pennies probably $25 a plant on the fireplace with a card addressed to the new owner wishing me much happiness in the new home. I am glad this situation a ended well. Just wanted to update u all. I got lucky this time but will make certain we have proper paperwork next time. 

Originally posted by @Rhondalette W. :

@Michelle Fourcand Michael S.

I just wanted to say thank you all for you advice on the seller who wanted to remain in the home 5 days after closing. I am pleased to report that the seller moved out on yesterday and I officially took possession. To my surprise the seller left the refrigerator, washing machine, Hoover vacuum cleaner, a jar of pennies probably $25 a plant on the fireplace with a card addressed to the new owner wishing me much happiness in the new home. I am glad this situation a ended well. Just wanted to update u all. I got lucky this time but will make certain we have proper paperwork next time. 

 Glad to hear the good news!

Adrian Chu, Adrian Chu & Associates | Horizon Real Estate | [email protected] | 2064075452 | WA Agent # 107768, WA Lender # MLO-920749

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