Tales of a Seasoned Broker

Since my time as a Realtor in Northern NJ I have encountered many different types of sales and sale structures. One sale called the lease back would come up a few times a year as a concession to the seller whereby the seller  would be allowed to stay in their home post closing until the new place they were moving to was ready. The lawyers didn’t love it as it presented specific problems including who would be responsible, for example, if  a toilet stops working after the closing. Would the original owner, who is now a tenant, force the new owner to fix or replace it?  

Attorneys are able to design leases to handle these concerns and we execute a handful of these types of sales in any given year. But these post closing agreements  fall under  the category of short term rentals for such short term problems i.e.  the construction on the seller’s new home isn’t complete yet, or Mr. and Mrs. Seller must  stay an extra month due to  a family simcha before they move to Florida. 

But now we have seen the “lease back” make an entirely new entrance onto the stage. One as a much longer term solution. My company recently attended an actual closing whereby  all documents were signed and money wired from buyer to seller. 

An agreed upon leaseback was  then signed by both parties whereby the seller was allowed  to stay in the house for an agreed upon period of time. The new tenant (seller) was charged  rent and paid all utilities and the new owner (buyer) paid the taxes and not just for 30 or 60 days. The arrangement was structured  for an entire year.  This process affords the seller the comfort of knowing his/her home is sold and there is a breathing period to strategize and ultimately make arrangements for the  next move. This fit the new buyers criteria as they had an apartment in the city but anticipated  outgrowing it in the coming year. They felt comfortable staying in Manhattan knowing that they had secured a house that they loved and  in a neighborhood they were happy with. 

The sellers, secure with the knowledge that they have sold their home for top dollar, were more than happy to  take their time finding their next home. 

Of course, this scenario does not  work for every buyer and seller. If a mortgage is involved with this type of transaction buyer must also confer with their  mortgage banker or  broker first as not all mortgages allow the sellers to occupy the home post closing for more than 60 days.  It is an option that can be useful to many in a way that historically wasn’t so relevant before. We like to describe this as “having your cake and eating it!”

Nechama Polak is the Broker of Record and Owner of  V&N Group LLC located at 1401 Palisade Avenue in Teaneck, New Jersey. Send your thoughts and comments to nechamapolak@gmail.com or call 201 826 8809