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What happens during a seller rent back?

When a home seller remains in the home after the close of escrow, it’s as a tenant or renter – even for a brief period of a few days.  With the shifting role from home owner to new renter, the rules of engagement may not be clear, and expectations may not line up with the addendum for the rent back.   So let’s do a set of what happens during the tenancy period after the sale is done.

Seller rent back True or False questions – which of these statements is true or false for the period when the seller is a tenant?

  1. When escrow closes, the buyers get keys to the home
  2. The seller must be undisturbed by the buyer until moving out
  3. The buyer can do repairs, including fumigation, during the rent back
  4. Prospective tenants may view the property during the rent back
  5. Contractors may enter the property during the rent back
  6. The new owners must give 72 hours notice before entry
  7. To enter the home, new owners must use an official CAR or PRDS “Notice of Entry” form
  8. The new owners may only enter the property if their Realtor is present or if the listing agent is present
  9. If the seller overstays the agreed upon rent back time, there’s a penalty fee that will be charged
  10. If there’s a rent back, buyers may do a walk through both before close of escrow and also at the end of the rent back period.


What does the paperwork saySome of these are challenging not just for buyers and sellers, but for real estate agents too. The reason for the confusion has to do with the number of forms involved.  There are 3 different rent back addenda which may be employed in Silicon Valley: 2 options from the California Association of Realtors (CAR) and 1 from the Peninsula Regional Data Service (PRDS).

  • PRDS form RSOAS – Seller Occupancy After Sale Addendum (1 page form)
  • CAR form SIP – Seller in Possession Addendum (1 page form, intended for less than 30 days)
  • CAR form RLAS – Residential Lease After Sale (5 page form, for more than 30 days rental to seller)

Some Realtors only use either CAR or PRDS forms, but I have found that depending on whom you represent, it may be worthwhile to tell the client about the differences between them as they are not exactly the same for all of these questions.

Now let’s go back to our questions and see what the contract & addenda have to say about each one. (more…)

Seller rent back after close of escrow: what do you need to know?

Rent back forms varyIf you are buying or selling a home in Silicon Valley today, you may be considering including the option to have a “seller rent back” after close of escrow.  What does this mean?  This is often referred to as “seller in possession after close of escrow” or “seller occupancy after sale” and it’s very common in the San Jose or San Francisco Bay Area now.

Most of all, a rent back means that after the seller(s) no longer owns the property, he / she / they stay on as tenants.  The new owner needs to have home owner’s insurance (which will be mandatory if there is a mortgage – the lender will insist).  The new owner becomes a landlord and, as such, gets a set of keys at the close of escrow.

Second, it means that there will be a separate addendum for the tenancy.  Depending on how long the term will be (less or more than 30 days) and which purchase agreement form is used (PRDS or CAR), the paperwork varies a bit.

Naturally there are a number of terms in the lease or rental agreement.  Among them are these:

  • Amount of security deposit, if any
  • Amount of rent being charged, if any
  • Term of the rent back or lease (most buyers have loans, and most lenders do not permit more than 60 days or they consider the property “non owner occupied” and charge a higher rent”)
  • Who will pay for things like gardening, utilities, pool maintenance, and HOA fees, if any
  • Who will hold the deposit (the buyer or the escrow company?)
  • Under what circumstances the new owner can enter the property

When the market is super over-heated, we tend to see nominal security deposits and free rent backs or no-cost rent for 30 or 60 days.  Usually the tenant takes care of utilities, garden, pool maintenance. (more…)

Rent back: what is it, who wants it, what are the issues to consider?

With our severe seller’s market in Silicon Valley, many properties are selling with multiple offers, over bids and highly competitive terms.  One of them which is frequently sough by sellers is an option for a “rent back”.

What is a rent back?

PRDS Rent Back FormA rent back refers to the seller staying in possession of the home after it’s been sold to the new owner. Sometimes it is free, other times there is a cost, but often (either way), a security deposit is held in escrow.

Why do some sellers want to stay in the property after close of escrow?

If the sellers have sold their house, townhouse or condo, why do they want to continue living there?  In most cases, the sellers request the ability to stay on a little longer for any number of reasons.  Perhaps they need to find a replacement property, they are building a home which is not yet completed, they want a child to finish out a term at a neighborhood school, or some other deadline or goal has not yet been met.  If they don’t have the ability to lease for that period of time, they will have to move twice – something no one enjoys. (more…)