Letting owner to stay in the house after escrow closing –

[2012 turns around]

After reading the thread ‘short-sale IED’ by ‘tugg49’. I am little concerned about the somewhat similar -not the exact same- situation here in my short sale deal approaching closing soon. The closing is tentatively mid next week which is barely few days before Christmas. A month ago, all relevant parties in the transaction knew this is coming and owner, thru their agent, requested staying in the house until end of the year. This is pretty usual and I wholeheartedly agreed and asked to them to stay even after the new year.

In fact we had purchase agreement addendum drafted and both parties signed about how long is the post-closing stay and owner pays the pro-rated amount of monthly burden (mortagage PI+tax+MS+insurance etc).

This is OK and no IED here right? What if I the seller says he/she wont vacate and demand so-called blood-money? After signing such PA-addendum, can he/she do it legally? If so, what are my options? The last thing ever my wife and I want now is to spoil our holiday spirit.

Pigg, your opinions please.

[(former)FormerSanDiegan]

You should have them sign a daily /weekly rental agreement, with rates that quadruple after a certain date.

[earlyretirement]

Just out of curiosity, can’t you just delay the closing a few weeks and close after the holidays? And then have them move out?

Even if you made some penalty clause, I guess theoretically they could overstay their agreed upon move out date.

We bought a house earlier this year and we allowed the previous owner to stay in the house several months and did a leaseback after the closing for 4 months.

I wasn’t worried about them overstaying the agreed upon time. Originally it was just going to be 2 months but I wasn’t in any hurry and put in a maximum of 4 months and made the rental payments higher for months 3 and 4.

It wasn’t a short sale and the previous owners were very nice and also the original owners of the house and it was in immaculate condition so we weren’t worried.

However, I will say I wish I put in stricter language about them taking care of the landscaping. I only put they were responsible for paying the landscaper but it was clear after taking possession they stopped having the landscape company come after the closing.

It looked fabulous when we did the final walk through but by the time we moved in there were many weeds, some plants were dying and the lawn in the backyard was very long.

I’ve done many property sales where I allowed the previous tenants to stay in the property for a limited time but I probably wouldn’t do it again. None of them were in San Diego. They were in other places.

I only had a problem one time but I had to hire a lawyer and it was a hassle so I wouldn’t do it again. I’d say if you can just delay closing a few weeks that would be the best thing if it won’t jeopardize the deal.

Any one can speculate what MIGHT happen but you just never know. Especially considering it’s a short sale and these people may be having financial problems and their credit is probably shot already.

[moneymaker]

If you want to increase rents by more than 10% then you have to give 60 or 90 days notice, I foget which but it is designed to protect renters.

[njtosd]

The problem with letting people stay past closing is that if they don’t leave voluntarily the only option you have is to evict them, which is a long process in California. We recently sold our home in NJ and stayed in the house 5 months after the closing under a “Use and Occupancy” agreement, which apparently gave us fewer rights (and protected the new owner more) than a standard lease back would. The purchasers knew that we wanted to be out of NJ after our kids finished school for the year, so they didn’t have much of a problem with the arrangement, but it could have been a problem for them if we were uncooperative. I don’t think I’d ever close without taking possession immediately upon closing.

[2012 turns around]

Thanks a lot for your views/comments. I too wanted early Jan closing. But sellers’ lender bank put 30 days closing/funding condition on the short-sale approval letter while we requested 40-45 days.

My agent (and owners’ agent too) explained short-sale approvals usually come with stringent conditions such as this – and very hard to convince the bank’s contract negotiator so I had no choice.

[urbanrealtor]

[quote=vasans]Thanks a lot for your views/comments. I too wanted early Jan closing. But sellers’ lender bank put 30 days closing/funding condition on the short-sale approval letter while we requested 40-45 days.

My agent (and owners’ agent too) explained short-sale approvals usually come with stringent conditions such as this – and very hard to convince the bank’s contract negotiator so I had no choice.[/quote]

I understand the stupid restrictions.
As a general rule, I never let anyone stay a and pay in this kind of situation.
It makes them into tenants.
If someone stays uncompensated, then it is a license and can be terminated without a full eviction.
Situations vary though.
So that might not have been appropriate here.
If this dude stays, you can evict him but that will take several weeks and cost several hundred dollars.
If the seller does not move in a way that is consistent to what they have agreed to, then move quickly to retain an eviction attorney.
Remember, these guys are used to living for free and their credit is already damaged.
You can’t threaten to hurt them more.

[2012 turns around]

Update: Thanks everyone and we managed to convince the lender to extend the closing date by a week to 28th and we signed off the closing docs today. Funding/recording tomorrow. They’re moving tomorrow. Happy holidays and new year 2012 to you all.

[2012 turns around]

My fear was totally unfounded. We take extreme edge cases but majority of folks we deal with were with normal people like you and me. It was tearful send off the to owners yesterday and we made everything possible to have them at ease. Hate to see nice families leave their adored dwelling once they called homes. Well the world is cruel sometimes.

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