Seller(Tenant) Temp Lease Help

9 Replies

I am relatively NEW to REI and also on BP (2 months) but found this forum very helpful. I need your advice on my 1st property temp rental.

I am about to do my 1st ever SFH buy-n-hold closing on 6/30. Everything is in sync and ready to go. Today, I have heard from Seller's realtor (thru my realtor) that Seller wants to do a TEMP resi lease for 48 hours from ME with an option to extend it further for $42/day. So, they can transfer a fund and complete their NEW home closing with the down payment of my closing. The avg rent expected from a regular tenant is approx $1,400/per month. Here are some more details:

Seller (Tenant) Temp Resi Lease Terms:

  • Lease commence on closing date and terminates 48 hours later
  • Tenant pay $0 (Zero) as rental for 48 hours with $0 Deposit with all utilities paid by tenant
  • Tenant pay $42/per day during the possession after the termination of the lease

Buyer (Landlord) Intention

  • Since, it's a summer time, I (Buyer/Landlord) would prefer seller (tenant) to vacate as early as possible so I can put it for regular rent
  • Is it reasonable to offer 48 hours for FREE without ANY rental/deposit? BTW, That was a suggestion from my Realtor (Buyer)
  • Can I have HEAVY penalty beyond termination of temp lease (beyond 48 hours) for ex very HIGH daily rent $100/per day, after termination of the lease so, there is a clear message to seller (tenant) to vacate the property as early as possible.
  • Also, I have few service like minor work with GC and promoting for rental has been lined up from 7/1.

Any feedback/advice will be greatly appreciated.

Thanks,
DP

I wouldn't do this at all, but if they insist:

I would counter with $1400/month up front plus $200 utility payment up front.  

IF you can rent it in July for a prorated amount, you'll send the balance back once they've cleared out.

When I was selling a house and was caught in the middle, I was able to lease my house for 1 week for $200.00.  This was a very generous person who worked with me and my family.

If you are feeling that generous - great.  The realities are, there are hotels who specialize in this and they charge considerably more than what I paid.  

If you are considering this, is it because the person who is selling is doing you a favor?  If they are, you may show good will and faith; If they are not, I would say "watch out" - you are being taken advantage of.  Either way, be careful.

@Aaron Montague

Thanks Aaron... Why to give an option for a Month for $1,400/month with prorated amount. I want them to vacation in 48 hours, otherwise trigger heavy penalty for $$$/per day lease beyond termination.

@Arthur Kendall

Thanks for your response Arthur. Only special provision, I have made during the initial contract signing is "Rent home back to sellers via Sellers temp Resi lease to provide to find a new home. TBD". That's the only favor with good will and faith, I am considering for. But again, I am not comfortable for FREE 48 hours and Want to put heavy penalty (like $100/per day) beyond 48 hours.

@DP Patel  

They are costing you money. If you have their money up front, it is a better incentive for them to get out.  Just because you want them out, doesn't mean they are going to leave.  Plus it assures you a month's rent either way.  

I wouldn't want them to stay at all, but with the $1600 up front, you know you are covered for July.

I would say no- certainly to a no pay clause.  There are rent back clauses but the rent should escalate closer to a hotel fee then a monthly rental.  Something like 100.00/ day then occupancy beyond a certain point at a higher rater.   You would also hold money in escrow for that.  Basically they are asking to fail to give possession for a relatively nominal fee.    They can put their stuff in a truck and store it for the interim or they can have some amount held in escrow and the rent deducted for the time they occupy your property for this short term lease. I would make that escrow amount at least 1 months fees.  I wouldn't expect to get a check from them for rental if they are proposing this- I would expect they are tight on funds.    You can just say no ,  you have a contractor lined up. Alternately make the security and cost significant so they have an incentive to leave.

Originally posted by @Colleen F.:

I would say no- certainly to a no pay clause.  There are rent back clauses but the rent should escalate closer to a hotel fee then a monthly rental.  Something like 100.00/ day then occupancy beyond a certain point at a higher rater.   You would also hold money in escrow for that.  Basically they are asking to fail to give possession for a relatively nominal fee.    They can put their stuff in a truck and store it for the interim or they can have some amount held in escrow and the rent deducted for the time they occupy your property for this short term lease. I would make that escrow amount at least 1 months fees.  I wouldn't expect to get a check from them for rental if they are proposing this- I would expect they are tight on funds.    You can just say no ,  you have a contractor lined up. Alternately make the security and cost significant so they have an incentive to leave.

 Thanks Colleen for very precise information. I really appreciate your response. Great thought.

make them get renters insurance ,  I would charge them MUCH more than going rate .  It gives them incentive not to stay , they arent having to pay movers 2 times , they arent living in a hotel . Look at it like a business man . A extended stay hotel or a motel would charge how much ?  Meals ?  Storage?   If their new house isnt done , there can always be a problem that delays settlement , too many to list .   

All,

[CONCLUSION] Thanks a lot for all your response on my post. It was helpful. Just a recap on final outcome: As soon as, I sent my Seller (Tenant) the contract for 48 hours temp lease ($50/day) and rest with ($100/day), the seller/realtor responded first with little frustration for not allowing seller for 2 days to move out without charge (Their initial request was for $0/48 hours) and later clarified that seller(tenant) will plan on having everything on that truck same day of closing.

So, bottom line is: The seller were really interested for FREE 48 hours. As soon as, we put the clause for $$ for 48 hours, they are ready to pack and leave the same day. :-)

Thanks again,

DP

It's amazing how money motivates people on both sides both cost and profti! Glad you got it figured out.