Seller Rent Backs – Should There Be A Security Deposit?
I think you previously addressed a situation where the seller rented back. My son is in escrow on a La Crescenta home. Not surprisingly there were more than 10 offers and he had to agree to allow the seller to remain in the home and rent it back from my son. The seller will pay his mortgage payment as rent. My son is closing in two weeks, and I am concerned that there is not a refundable security deposit. He will be a landlord and it seems that there should be a deposit. The seller/tenant might damage walls or flooring when moving. The seller refused to offer a security deposit. Can you weigh in?
In today’s competitive real estate climate, seller rent- backs are becoming much more common. It’s often difficult for sellers to get the timing right between the sale of their current home and their next move. A common solution is for the seller to request a rent-back. This allows the seller to remain and rent the property from the buyer after closing.
This should have been agreed to and addressed in writing at the time the offer was negotiated. So I can understand the seller’s reluctance to renegotiate now. In many real estate transactions allowing the seller a few extra days to move without a security deposit is common. There is always the possibility of the seller damaging walls or flooring whenever they move, be it a few days or several months.
If the seller shows pride of ownership in their home, I don’t foresee any reason they would cause damage during a rent-back. And, if they did, you could perhaps seek redress in small claims court.
One piece of advice for your son is check with his insurance agent to be certain that the home is properly insured during the rental period. The seller should also convert their policy to a renter’s policy which will insure their personal property.