Rent back clause in contract.

3 Replies

Hi there BP, I have an agreement that I'm working on that requires some sort of rent back option for the tenant. It's the owners ex wife and she will need the cash from closing to secure a new place. I'm currently using a one page P and S agreement that does not have any verbiage about this. If I were to offer a rent back period of 60 days or so is that something I can just write in to the "any other stipulations" part? Also, is this something that would deter buyers too much? Assuming a deal thats a deal is a deal? I value the communities time, so thank you in advance. Regards.

Hi Joshua Lee Wegner,

Licenses to remain in possession can be a little tricky sometimes. It really depends on tenant laws in the area in which the property is located.

If I were to allow an owner to stay in possession after the close of escrow, I might say something to the effect of, "[Occupant’s name] is granted permission to remain in possession of the property for a period not to exceed 60 days. Occupant shall have no right to remain in possession beyond the 60 day term and may be responsible for court awarded damages in the event possession is not surrendered within 60 days."

I’d also include verbiage that outlined certain obligations and expectations required of the occupant. Things like proper maintenance, responsibilities such as utilities, and strongly advising the inhabitant to retain renter’s insurance for the duration of the occupancy. A release of liability might also be a good option.

A purchase agreement that is only one page long might not work well for this. In California, we use a form known as an addendum in order to add additional terms to an agreement. An addendum is pretty much just a sheet of paper that acts as a supplement to the original contract. In layman’s terms: We add an additional page to the agreement.

This secondary form, which would also need to be sign, would be linked to the original form. Let's call it Addendum No. 1 for now. In the additional stipulations section of the purchase agreement, I might add something like, “Addendum No.1, dated August 23, 2018, is to be made apart of this agreement.”

The best advice in these types of situations is to always consult with legal counsel. Hope I was of some help. Take care!

I'm currently using a one page P and S agreement 

You almost certainly need a better contract.  There's a reason state Realtor contracts are multiple, legal size pages with fine print.  There may well be sections of your state contract that don't apply to your deal.  But there is almost certainly a number of sections in that contract that are missing from yours.  These one pagers are guru malarkey meant to make this seem easy and simple.  But they have so many gaps that they barely do anything at all.  At least have a look at the state contract.  It probably has a section to cover this situation

I bought a house where the seller wanted to stay for 90 days. I had my lawyer write up a lease, signed with security deposit and three months payment etc. it was treated as a short term lease agreement. 

When they left any damage incurred after they took possession as tenants wouldnif been charged back to them. There was no additional damage so they got their deposit back.