Owner wantes to move out after closing. What is my best action?

Question

I am in the process of buying out next flip, and the homeowner (an elderly woman who lives by herself) need to move from the property afrter closing, because she will use the money from closing for her next house/ rent. I havent had this happen to me before, so I wanted to ask you guys, what the correct next steps I should take. My idea was to have a contract made by an attorney, agreeing to a specific time period in which she would have to leave the property, she's saying she should need about a week to move. Any input will be greatly appreciated!

JD Martin · Answer

Escrow is your friend. A lot of it.I bought a house maybe 5 years ago from a guy that was too broke to pay attention. He asked for a holdover because he needed the proceeds to pay for a mover. We held back in third party escrow a big chunk - $10k I think - and gave him a 3 day rental for a few hundred bucks and a $100/ day rental rate beyond it. If he left the place dirty, damaged, anything, no money until it was settled. He was out in 2 days and the place was spotless.You need something financial to hold over their head. Money is the only thing people understand.

Account Closed · Answer

You might want to read and join this threadhttps://www.biggerpockets.com/...

Jeff Copeland · Answer

All excellent responses here. 1. Have her sign a lease. It can be for more that a week, make it realistic. If 30 days works for you, that's reasonable. 2. Have the lease state what the penalties are for not leaving (and/or include a reasonable cost for extending the lease). 3. Have the title company or attorney's office hold back a chunk of money in escrow. When the tenant leaves, they get their money. If they don't, they lose it, along with any costs incurred for cleaning and damages, holdover rent, and attorney's fees for evicting them if it comes to that.

Drew Sygit · Answer

@Andrii Sazhnev agents always want to take the path of least resistance and charge a daily amount with an escrow holdback of x days.They NEVER worry what will happen if the seller doesn't move out!In addition to escrowing funds, suggest you have seller sign a lease with 200% Holdover charge if they do NOT move out by agreed upon date.

Theresa Harris · Answer

I've had the same situation. Sign a lease and hold back a significant amount of money. If you are wanting to flip it, time is money, so give her a hard deadline.

Billy Daniel · Answer

It's called delayed occupancy here. It's not uncommon for it to be up to a week to allow the previous owner to move after the transaction has closed. If the seller needs more than a week and the buyer is willing, we typically just add the terms in the contract before closing. Those terms are usually whatever market rent is for "X" amount of days.

Charlie MacPherson · Answer

I did this when I was a Realtor in Massachusetts because we found the ONLY home that my buyer client could afford. This has the possibility of going VERY, VERY wrong if the buyer doesn't move out on schedule. You could even be looking at having to evict.That means that you need an attorney to draft a "Use and Occupancy" agreement. You should charge an above-market rent for the agreed upon period. On the very next day, the rent should go up a LOT. Maybe double. The idea is to make it hurt if the seller stays beyond the agreed upon term.You also need a holdback of funds sufficient to pay for that rent, an eviction and clean out.You might be better off getting them another place to rent for a short term. If they overstay, it's not your problem.In the case where I had to do this, the seller agreed to be out in 2 weeks. As I recall, they left in 4 weeks - and the place was left in a mess (the seller was a borderline hoarder).Ultimately, we burned through the entire holdback and had to pay for cleaning. But we got them out. Just remember, this can go VERY, VERY wrong.

Malkia Ra · Answer

This is common practice called a "rent back." The seller's realtor will need to include a rent-back agreement with the contract. If you agree, funds are withheld for this reason until the seller moves out.

Joe S. · Answer

Basically you hold a large amount of money back. Charge a certain amount per day from the money held back if they go past the deadline. you want to make the amount they pay considerably more than a hotel room or why would they ever leave.

Alyssa Goade-Munch · Answer

if you like them, free rent back with a lease and deposit if damages occur! I do this on a lot of properties.