Updated about 4 years ago on . Most recent reply
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My mother owns a very nice family home in Northern California (El Cerrito) that recently appraised for $1.3M. She owns the house free and clear and has owned it for about 20 years. She would like to sell her house and rent it back from the new owner at fair market value in order to continue living in the house. She is 87 years old and was diagnosed with terminal cancer a year ago. The house is in excellent condition, and my mom has phenomenal credit history for many many years.
Questions:
Can my mom be appropriately protected by a stipulation in a purchase agreement that she may remain in the house? Or could her tenancy be incorporated as a condition of the sale? My mom has made it clear she'd like to die in her house. So I'd like to make sure her wishes can be ensured in any transaction.
Have you heard of, or been part of, any similar scenario? Would love to hear how it transpired.
Thank you!
Most Popular Reply
Rent backs are not all that uncommon especially in hot markets like NorCal. We completed a relatively short rent back just last year in San Anselmo for an elderly seller who needed time to find a new home and move. A brief consult with a local attorney is in order to ensure that her rights are adequately protected. I imagine the leaseback term will be something along the lines of "the earlier of her death or x month(s) with the right to renew on the same term for x months(s) should she survive the initial lease term." As the buyer will be taking on a good deal of market risk, I would expect the transaction to close a little below market to account for this risk (but then I do not have a crystal ball and it is crazy out here).