Seller’s Temporary Lease – What You Need To Know

The Seller’s Temporary Lease – When is it used, for how long and what can go wrong?  The Seller’s temporary lease is used when a seller needs more time after closing to vacate the property.  This could be for any number of reasons from needing more time to move possessions to wanting to wait until the school year ends.

When Are Seller’s Temporary Leases Used?

Sellers are often in a quandary concerning when to move their possession’s once under contract.  What happens if the sale falls through and all their things are in a truck or storage?  This is a time to use the Seller’s Temporary Lease or as it is known, the leaseback.  By leasing back the property for a short time, it enables the seller to be sure the transaction actually closes and funds before moving out.  It may also be an option if there is some last-minute glitch that would make a closing date extension undesirable.  Perhaps the seller needs a little more time but extending the closing date could cost the buyer a higher interest rate.

What Is The Term Of A Seller’s Temporary Lease?

As with most things in real estate, the lease term is entirely negotiable between buyer and seller up to a period of 90 days.  In general, these leases will normally run from a few days to a week or two at most.  Buyers are anxious to get into their new homes so a longer requirement by the seller can cause them to look elsewhere. However, if everyone agrees it can go as long as 90 days.

How Are Leasebacks Structured?

The enclosed example, Seller’s Temporary Residential Lease (TAR 1910) will give you an example of the lease criteria.  The buyer is now the landlord, the seller the tenant and of course the property was the one just purchased.  Here is where the fun begins.  Buyer and seller determine the rent per day, the deposit required, who will pay the utilities and the amount of the hold over charge.

Frequently on a lease only lasting a few days these terms will be very reasonable.  I have seen them as low as $1 per day, no utilities & without a deposit if the purchase has been very friendly.  On more that a few days term, buyers will often divide their mortgage payment by the required days and use that figure for the daily rent.  Holding over charges are normally high because you obviously want the seller to be gone on time.  The take away is if you are a hard negotiator & have made the buyer’s purchase painful, don’t expect a leaseback with easy terms.

What Are Some Pitfalls Of The Temporary Lease?


Both parties need to check into insurance ramifications with their respective companies. Imagine if the house just purchased and leased back burned to the ground. If the buyer purchased using financing, they should have insurance but should verify landlord coverage with their insurance company.  Similarly, if the seller canceled his property insurance and had no renters insurance they could have lost coverage for their possessions.  Check with your insurance agent!


Charges for the daily rent based on the term and deposit are paid at the closing but how do you get paid for utilities or hold over?  Welcome to landlording 101!  This is where you will wish you had a sufficient deposit because the likelihood of collecting could be slim.

Hold Over

It sounds good to have a high hold over charge as an incentive for the seller to vacate.  If you have a reasonable buyer and seller everything will be paid. However, if it’s the opposite then you will have to evict the seller and sue for the hold over amount. If that doesn’t sound like fun, now you know why you need a decent deposit.

Damages & Move Out Condition

Suppose the seller damages something intentionally or unintentionally when moving out. You have very little recourse without a sufficient deposit. In a normal sale situation you could do a walk through before closing to make sure the property was in the same condition as purchased and cleaned appropriately.  In the lease back situation, you own the property and you are the landlord.  If the seller leaves it filthy, you have little recourse without the appropriate deposit.

Your Agent Can’t Help

Here is the big disclaimer.  Real Estate Agents are not lawyers.  We can give our opinion on real estate matters, help you negotiate and complete the leaseback form.  If you have problems with the seller leaving on time, the condition the home was left in or getting payment under the terms of the leaseback you will have to obtain legal advice.

After learning of these pitfalls you are probably thinking you would never do a Seller’s Temporary Lease but these are just things to be aware of.  It isn’t often that you will be faced with a bad situation & the temporary lease can be the very thing that gets your property sold or allows you to buy your dream home.  If you need more information about buying or selling your home, contact Keith Laursen today.




About Keith Laursen

I am a Fathom Realty Realtor specializing in town and country properties in the cities of Van Alstyne, Anna, Melissa, Howe, Gunter, Tom Bean, Whitewright, McKinney and Plano, TX.

My trusty horse and I will help you "spot" the best in real estate. Remember, it can't sell if it's not spotted!
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