Rent back clause in contract.

[Joshua Lee Wegner]

Hi there BP, I have an agreement that I'm working on that requires some sort of rent back option for the tenant. It's the owners ex wife and she will need the cash from closing to secure a new place. I'm currently using a one page P and S agreement that does not have any verbiage about this. If I were to offer a rent back period of 60 days or so is that something I can just write in to the "any other stipulations" part? Also, is this something that would deter buyers too much? Assuming a deal thats a deal is a deal? I value the communities time, so thank you in advance. Regards.

[Anthony Sumbry]

Hi Joshua Lee Wegner,

Licenses to remain in possession can be a little tricky sometimes. It really depends on tenant laws in the area in which the property is located.

If I were to allow an owner to stay in possession after the close of escrow, I might say something to the effect of, "[Occupant’s name] is granted permission to remain in possession of the property for a period not to exceed 60 days. Occupant shall have no right to remain in possession beyond the 60 day term and may be responsible for court awarded damages in the event possession is not surrendered within 60 days."

I’d also include verbiage that outlined certain obligations and expectations required of the occupant. Things like proper maintenance, responsibilities such as utilities, and strongly advising the inhabitant to retain renter’s insurance for the duration of the occupancy. A release of liability might also be a good option.

A purchase agreement that is only one page long might not work well for this. In California, we use a form known as an addendum in order to add additional terms to an agreement. An addendum is pretty much just a sheet of paper that acts as a supplement to the original contract. In layman’s terms: We add an additional page to the agreement.

This secondary form, which would also need to be sign, would be linked to the original form. Let's call it Addendum No. 1 for now. In the additional stipulations section of the purchase agreement, I might add something like, “Addendum No.1, dated August 23, 2018, is to be made apart of this agreement.”

The best advice in these types of situations is to always consult with legal counsel. Hope I was of some help. Take care!