July 14, 2021
There are many reasons for wanting to sell a home quickly. There are also some good reasons for delaying a move, and you might think it’s not possible to have both.
But, think again. The truth is that your buyer may not want or need immediate occupancy for some of the same reasons you don’t want to move out in a hurry, The end of the school semester, difficulty scheduling movers, weather, construction delays on a new home, the timing of a business move, vacation plans, and a whole host of other reasons can influence your timing.
A lease-back option is, in those cases, a viable option.
Just What Is a Lease-Back?
It’s often a win-win solution for both buyer and seller. Typically negotiated by the real estate agents for both parties, a lease-back or delayed occupancy agreement is a legally-binding contract.
You sell your property, close the deal, receive the proceeds from the transaction, but simply delay your moving date and retain full possession and use of the property for a specified and mutually-agreeable period of time for a set monthly fee. The specified rental fee can either be deducted from the total sum, or funds equal to the agreed-upon rent might be held in escrow and drawn down by the buyer over the specified term.
Treating the lease-back as a totally separate transaction is a third option, and you would then simply pay rent to the new owner each succeeding month for the duration of the lease. At the conclusion of the lease, there would be a final inspection, and you would be obligated to move out, and move on to your new life.
Mutual Advantages
The benefits to both buyer and seller should be obvious. Although the new owner gains tax and equity advantages, both owner and tenant have a vested interest in maintaining the property in its existing condition.
The buyer becomes the landlord, with ongoing responsibility for insurance, taxes and building maintenance or repairs from the date of closing and transfer of deed.
Seller responsibility, as a tenant, typically includes the agreed-upon rental fee, monthly utilities and general upkeep. Any cash proceeds from the sale, and/or a release of the mortgage commitment, provide greater financial freedom and relieve at least part of the stress of selling and moving.