Nowhere to Go After Selling Your Home? Learn All About Rent-Back Contingency

by Kristen White Blogger There are many instances where homeowners who sell their home end up without a place to stay or live for a period of time. Either their new home is still under construction, or they’re still looking for a home to buy altogether. Some families could end up living with relatives for the time being, but if their home is too small or they live too far away, it might not be worth it. If you are worried that you could end up homeless when you have a buyer looking to buy your home for a great deal, the best-case scenario is to propose a rent-back contingency.

What is Rent-Back Contingency?

A rent-back contingency is a clause in the contract to sell the home. This clause states that you and other family members can pay the new homeowners rent to continue living in the home for up to two months. This contingency gives you additional time to prepare to move to your new home. The home buyer benefits by getting back a portion of the money they spent to buy the home in the first place, so it is a clause that is designed to benefit both parties.

According to the National Association of Realtors, almost one out of five home sellers use a rent-back contingency to stay in the home after they sell it. That means you can continue to live in the same address as you wait for your new home to finish construction or look for Dana Point homes for sale.

A rent-back contingency can be considered a decisive factor for you choosing a home buyer over others, so it certainly is a difference-maker in real estate.

Details of A Rent-Back Contingency

When a rent-back contingency is written into the contract for the buyer to purchase the home from the seller, the ownership of the home switches to the buyer while the seller will continue to live in the home. From there, it typically works like living in an apartment or rental property. The seller has to pay the buyer an amount of money by a certain date, or they will breach this contingency.

Usually, the buyer and seller do not typically live together with a rent-back contingency. The seller will continue to live life as normal, and the buyer will move in after the seller moves out. This can be great for certain buyers, as some don’t typically move in right away, but need a number of weeks to get ready to move.

How Much Does Rent Back-Contingency Cost?

Rent-back contingencies in contracts will also state rent rate. This rate can be different depending on the people involved, but it can usually equate to how much mortgage, interest, taxes, and insurance can cost for a month or two. When the two parties agree to a deal on the house, the seller will pay back the rent rate to stay in the home for either two months, or for one month and will pay the buyer the same amount when that month is up. This rent-back contingency will typically explain what expenses are covered and why the rate is priced the way it is.

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Created on Jan 24th 2020 05:27. Viewed 244 times.

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