If 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 closing. What does this mean?
What is a rent back?
A 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. Normally, a security deposit is paid and held in escrow or by the new owner. (These are sometimes called rentbacks or rent-back agreements.)
Most of the time, it’s for 60 days or less, because longer than that and the buyer’s lender will consider the property as “non owner occupied” and the interest rate will be higher.
Upon close of escrow, the buyers get a gets a set of keys, but can only enter the property for certain reasons.
Brief video on rent back highlights
Rent back agreements
If you are going to do a rent back in Santa Clara County, you may run into one of three forms that sets this agreement in writing. These can impact each party’s rights and responsibilities.
With the California Association of Realtor forms (CAR forms), there are two distinct addenda depending on the length of stay for the rent-back after closing. (more…)
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?
When escrow closes, the buyers get keys to the home
The seller must be undisturbed by the buyer until moving out
The buyer can do repairs, including fumigation, during the rent back
Prospective tenants may view the property during the rent back
Contractors may enter the property during the rent back
The new owners must give 72 hours notice before entry
To enter the home, new owners must use an official CAR or PRDS “Notice of Entry” form
The new owners may only enter the property if their Realtor is present or if the listing agent is present
If the seller overstays the agreed upon rent back time, there’s a penalty fee that will be charged
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.
Some 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…)
Mary Pope-Handy, Realtor ABR, CIPS, CRS, SRES
Christie's International Real Estate Sereno, Los Gatos, CA 95030 408 204-7673 Mary@PopeHandy.com License# 01153805
Clair Handy, Realtor
Christie's International Real Estate Sereno 214 Los Gatos-Saratoga Rd Los Gatos, CA 95030 ClairHandy@sereno.com License# 02153633
Mary & Clair sell homes throughout Silicon Valley: Santa Clara County, San Mateo County, and Santa Cruz County. with a special focus on: San Jose, Los Gatos, Saratoga, Campbell, Almaden Valley, Cambrian Park.
Mary Pope-Handy, Realtor ABR, AHWD, CIPS, CRS, SRES Christie's International Real Estate Sereno DRE License #01153805 408-204-7673 email@example.com “Helping nice folks to buy and sell homes in Silicon Valley since 1993”
Clair Handy, Realtor, GREEN Christie's International Real Estate Sereno DRE License #02153633 408-721-6160 firstname.lastname@example.org “Helping nice folks to buy and sell homes in Silicon Valley”
This is the Valley of Heart's Delight blog , covering Silicon Valley real estate - Santa Clara County, San Jose, Los Gatos, Cupertino, and nearby communities in the South Bay Area and lower Peninsula. Find info on neighborhoods, disclosure issues, buyer and seller tips, and housing market conditions in the west valley and most of the county.Please also see my other websites and real estate market statistics site, which are listed in the sidebar, above.
Mary Pope-Handy, Realtor ABR, CIPS, CRS, SRES Sereno DRE License #01153805 408-204-7673 email@example.com
“Helping nice folks to buy and sell homes in Silicon Valley since 1993”
Strictly Necessary Cookies
Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.