Post Close Possession Rent

We did this many years ago although the time period was much shorter — 4 weeks, I think. Our lawyer worked it out with the broker representing the sellers. I believe we asked for the mortgage payment + utilities. We also took an extra month in escrow. I guess you could ask for more but, obviously, if this is for your mutual convenience you don’t want to make the terms punitive. Anyway, ask your lawyer what’s most appropriate.

NeoGrec

in General Discussion 8 years ago

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irozhko | 8 years ago

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In the process of closing on our brownstone, the sellers are asking for a 3 months after closing to do their renovation at their new home. This is pretty convinient for us, because we can take the time to get blueprints, file permits etc…
However, we are not sure what is customary for the seller to pay us in terms of “rent”. These are the options we are debating:
A. The whole monthly mortgage amount + bills
B. Interest, tax, insurance + bills
C. Something else.
Anyone has experience with this?
Thank you in advance

EJR | 8 years ago

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I had a long post written up and then the site crashed. The short answer is that this is very customary, and is handled pursuant to a ‘Post Possession Agreement’. The attorney who is handling your closing should be able to advise you on what is market as well as ensure you are properly protected in case (a) the Sellers cause damage or (b) refuse to leave. Make sure you have a good lawyer and are properly protected. If the Sellers fail to leave and you do not have proper protections it can get ugly fast.

In terms of what to charge, the following is standard in my experience:
A. Mortgage interest (per diem) (principal is not standard since it is your equity)
B. Taxes (per diem)
C. Utilities (per diem)
D. Insurance (per diem)
E. possession fee equal to ~2x of what market rent would be (per diem)
F. Failure to vacate penalty equal to ~3x of market rent (per diem) in event they fail to leave.

The total amount of A-E, plus a month’s worth of F should be held in escrow by your attorney from the purchase price amount. The contract should provide you with ultimate control over di sbursement of the escrow funds in the event of a dispute.

All in all it should be an expensive and restrictive contract from the point of view of the Sellers since you want to ensure they get out as fast as possible and no tenancy is created.

resident2 | 8 years ago

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Also make sure that you have easy access for architects, contractors inspections etc written very firmly into the use & occupancy agreement. Or all it will do is really hold up your plans.

slopefarm | 8 years ago

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Ok, this is not my area of law and don;t take this as legal advice, but I think you need o start with the metes and bounds in your deed. What does the deed say and how wide is your property under the deed? Is it 20′ or 19’3″?

Next, go back and look at the survey. What does it say? Go over it with the surveyor, if you have to. Are there any discrepancies with the metes and bounds? reports of any encroachments?

Now turn to your own measurements. Where is it out of whack with the survey? One side or both?

Before you start raising complex property and taxation issues based on just you and a tape measure, get on solid factual footing. Maybe pay the surveyor to come out and walk through with you your measurements and theirs. Worst case, pay for another survey by a different company. No one is going to trust your own measurements, and I would not act on them without backup that the RE world would considder reliable. .

slopefarm | 8 years ago

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Oops, sorry — I meant for my comment to end up in the narrow house thread. Sorry.

Guest User | 8 years ago

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oh ,, cool topics , and interesting posts ))

Attention2detail | 8 years ago

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Ask them to pay double or triple the cost of your mortgage per month. See how bad they need to stay then.

Attention2detail | 8 years ago

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oh wait, and don’t forget to require a 100K in escrow. Three months is a long time.