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Real Estate Question

Old 05-23-16, 06:13 PM
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Real Estate Question

I know we have some lawyers and legendary slumlords in these parts. I figure this place might be able to add some input.

My fiance and I are buying a house. The offer was accepted, we're approved for the mortgage etc etc. She calls me today and tells me that our lawyer informed her that the couple in the house want to do a leaseback for 5 days after closing. I have heard a lot of conflicting arguments about allowing it and not allowing it. The sellers seem like very nice people, but this is a case of wanting to cover our asses in regards to liability and condition of the house. I know some of the options we can use ie; holding funds in escrow until they leave, paying a pro-rated portion of our mortgage, charging per diem for any extra days still in the house etc.

Has anyone had any experiences (good/bad) with leasebacks?

Last edited by TheNightFlier; 05-23-16 at 07:18 PM.
Old 05-23-16, 07:12 PM
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Re: Real Estate Question

We had it for two months on our apartment and it was a headache. Not a disaster, but a major annoyance. Not the delay, but just all the back-and-forth and the contracts, etc.
They ended up wanting to stay an extra month on top of that (renovations on their new place still wasn't finished) but they totally overlooked the terms for additional time that *their* lawyer put in the contract addendum. (Let's just say that it was a per-day figure that would have made us VERY happy to let them stay as long as they wanted!) They thought they could stay at the same rate (which was prorated mortgage interest and maintenance) so we just pointed out the terms in the contract to them and they ended up moving somewhere else in the interim. Funny thing is, the guy was a lawyer himself.
That was just my experience - wouldn't surprise me if it normally goes a lot smoother. Had no issues with the condition of the apartment.
Old 05-23-16, 07:15 PM
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Re: Real Estate Question

Your realtor/lawyer should be able to advise you on this.

If it were me I would simply say "no". Stick to the earlier agreed upon close date. If they asked my why I'd say, "I don't want anything unforeseen to jeopardize the deal." I've seen million dollar deals fall apart because of a $10,000 chandelier that someone tried to make an issue of in the contracts. Fuck the chandelier, it's nothing compared to the purchase price. Stay the course and close the deal. Make the deal as simple as possible.
Old 05-23-16, 10:07 PM
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Re: Real Estate Question

It is generally easiest to say, "Oh, dang, we already made plans and won't be able to do that."

I've seen it work plenty of times and it has usually included holding money back, paying a pro-rated amount of the mortgage, or something else. I've never seen a really bad one. Most people are basically good. However, there is a huge amount of things that could go wrong, including you thinking there is damage somewhere new that isn't. Ultimately if shit went south you could find yourself getting a court order to get them out (because you don't want to treat them as a tenant, and this varies by state I'm sure) and suing them for damages and hoping they pay. But I've never seen that happen.
Old 05-23-16, 10:25 PM
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Re: Real Estate Question

Thanks for chiming in guys.

Dave as you said most people are basically good. The sellers appear to be very nice people, but who really knows. I'm calling the lawyer tomorrow to see what options we have to protect ourselves and what money options we will use to make sure everything goes smoothly.
Old 05-23-16, 10:44 PM
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Re: Real Estate Question

Tell them to live in their car, then offer the extra room to an Otter in need.
Old 05-23-16, 11:29 PM
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Re: Real Estate Question

Dave can back me up on this, but usually when seller proposition a leaseback is because they want an orgy with buyer. Orgy is best when all the furniture are removed so later you can more easily clean the semen off the wall, ceiling and corners.
Old 05-24-16, 09:23 AM
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Re: Real Estate Question

That is generally true.
Old 05-24-16, 12:44 PM
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Re: Real Estate Question

Say the mortgage is $1500 (so $30 a day). There's a risk premium involved, since you don't know if they're going to mess something up, so call it $50 a day. Then they need to leave a deposit ($5,000 sounds right, a lot could go wrong). And, well, you need a place to stay while they're still there. Say a Holiday Inn Express. Nothing fancy, but that's another $150 a day, plus another $50 a day to cover meals (since you can't cook in your own home).

If they really want to deposit $5,000 and pay you $300 a day to live in your house, that's fine. Anything else you're doing them a personal favor, which is bad business.
Old 05-24-16, 12:52 PM
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Re: Real Estate Question

Originally Posted by The Bus View Post
Say the mortgage is $1500 (so $30 a day).
If you go this route, make sure they are out by the 50th of the month.

Last edited by printerati; 05-24-16 at 12:59 PM.
Old 05-24-16, 01:08 PM
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Re: Real Estate Question

Originally Posted by SuperJim88 View Post
Dave can back me up on this, but usually when seller proposition a leaseback is because they want an orgy with buyer. Orgy is best when all the furniture are removed so later you can more easily clean the semen off the wall, ceiling and corners.
Originally Posted by kvrdave View Post
That is generally true.
Dave knows but isn't mentioning regulations vary from state to state. What in one state may mean 'orgy', in another can mean 'slaughter festival'.

Check with your local Association of Realtors.
Old 05-24-16, 03:28 PM
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Re: Real Estate Question

Originally Posted by printerati View Post
If you go this route, make sure they are out by the 50th of the month.
Old 05-24-16, 03:28 PM
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Re: Real Estate Question

My total adds up to the correct amount though! #DontShowYourWork
Old 05-24-16, 10:46 PM
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Re: Real Estate Question

Originally Posted by Kurtie Dee View Post
Dave knows but isn't mentioning regulations vary from state to state. What in one state may mean 'orgy', in another can mean 'slaughter festival'.

Check with your local Association of Realtors.
It also varies from east or west of the Cascades a fair amount.

I'm not on the good side of that deal either.
Old 05-25-16, 06:01 AM
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Re: Real Estate Question

Originally Posted by The Bus View Post
Say the mortgage is $1500 (so $30 a day). There's a risk premium involved, since you don't know if they're going to mess something up, so call it $50 a day. Then they need to leave a deposit ($5,000 sounds right, a lot could go wrong). And, well, you need a place to stay while they're still there. Say a Holiday Inn Express. Nothing fancy, but that's another $150 a day, plus another $50 a day to cover meals (since you can't cook in your own home).

If they really want to deposit $5,000 and pay you $300 a day to live in your house, that's fine. Anything else you're doing them a personal favor, which is bad business.
Our lawyer wrote in a provision in the delivery of possession which was agreed to, that states they have to pay us $200 a day for the 5 days, and any day after those 5 days will be an additional $400 per day. There is going to be a deposit of $4,000 in escrow to cover it.
Old 05-25-16, 01:08 PM
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Re: Real Estate Question

Thank you. Let me know the best address where I can send an invoice.

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