Profile picture for user72361433

Is free rent back on short sale common?

My fiance and I have put an offer down on a short sale in Brentwood, CA.  The sellers countered, requesting a 59 day rent back at no cost to them.  Over the course of discussion we've gotten them to agree to 30 days.  The selling agent has said that in this market with a short sale, that a 30-60 free rent back is completely normal and that we should have no reason for concern.   Our primary concern is that the current verbage provides no legal protection to us in the case that they do not leave, and although we have been told that they intend to, there has been no show of good faith by agreeing to stipulations provided they do not.   A few questions:

A)  Is a 30-60 free rent back actually common in today's market, even in a short sale?


B)  If we were to agree to a 30 day free rent back, is it unreasonable for us to request that stipulations be placed in the purchase agreement requiring the seller to pay our PITI if they fail to vacate the premises after the first 30 days, and after 60 days, should we have to take legal action to have them removed from the home, they would be responsible for all legal fees associated with that if we were to prevail?

The selling agent has stated that she has never had an issue in all of her short sales with the seller leaving within the specified time and we should just trust that this will be the case this time as well, and that our inexperience in the market is the reason that we are uncomfortable with this.  But given that a Post-Occupancy Agreement turns this into a landlord/tenant situation and California is a tenant-friendly state, I don't feel that we're being entirely unreasonable in our concerns.

  • May 16 2013 - Brentwood
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Answers (5)

Profile picture for wetdawgs
You are not being unreasonable.   Free rent back means you are giving them a huge gift (your costs for two months as well as the risk).

I'd simply say "no, no, absolutely no".

If there is no way to work through it;

1.  Hold back 20% of the payment in escrow until they clear out and everything is in satisfactory condition.

2.  charge them rent greater than your costs (2x perhaps)

3.  require renter's insurance.

4.  No commission paid to the agents until the sellers are out of the house and house in good condition.  commission held in escrow.

"Everyone else does it"  requires a motherly type response of "If Joey jumps off the cliff, are you going to join him?"


  • May 16 2013
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I was curious as to what other agents would say as I've never heard of a 'free rent back' scenario.

When a homeowner signs of on their short sale, they have to agree to not lease the property from the new owner and to vacate the premises within 60 days. Hence the 59 day 'free rent' idea.

I'd be curious to see comments from non agents on their take about this idea. Personally, I think it sounds absolutely crazy.
  • May 16 2013
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Profile picture for Jason Muse
I'm not in CA, but that is ABSURD!  Free leaseback for 30-60 days?  Since when is a tenant entitled to free rent?  The listing agent is not looking out for buyers interest at all.  What about any security deposit?  What if they actually leave within the 30 days, but the place is in shambles and you are left to deal with it.  
Some of my clients have allowed 3 days before (72 Hour Leaseback) allowable to move out after closing and funding at a free rate, but I don't even advise that.  Ultimately, it's my clients call, but penalties are assessed on a daily rate if they are not out. Why would they need 30 days of free rent?  Just crazy to me...

Good Luck
  • May 16 2013
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There is no such thing as a free rent back even with a short sale transaction.  Normally, the seller who requests for a rent back will pay for rent based on buyer's PITI, insurance and property tax.  Your concerns are completely valid.  I completely agree with paragraph (B) above.  All agreements must be in writing and must be part of your purchase contract.  You definitely must protect yourself.  Your agent is not doing a good job in representing you. Know your rights and consult with a legal professional who can guide you.
  • May 16 2013
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It's never unreasonable to protect "ones own interest". The selling agent stated that she has never had an issue-"don't let yourselves be the first"!
  • May 16 2013
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