Buyer/Seller Temporary Residential Lease

Buyer/Seller Temporary Residential Lease

Buyer/Seller Temporary Residential Lease

Buyer/Seller Temporary Residential Lease – these are great tools for providing temporary housing to the buyer or seller under specific circumstances.  For example, the seller is willing to close but needs additional time to pack or a buyer needs to move into the property prior to closing if the lease is up on their current housing. What obligations does the holder of a temporary lease have to the new owner?  The responsibilities set out are not remarkably different from a normal lease.  

For the purposes of this discussion, the person who will be temporarily occupying the property is the tenant and the person granting permission to occupy the property will be the landlord.

It is extremely important that you read these documents carefully (as all documents relating to real estate transactions and to ask questions) ; weigh the possible issues that may arise and discuss your concerns with your agent or broker. This is a brief summary and applies to Texas.  Every State is different.  This blog is a brief discussion of an important topic.

Notably both the Buyer Temporary Residential Lease and the Seller Temporary Residential Lease are for a period not to exceed 90 days.  Much like a lease, they contain the term of occupancy; they provide for consideration (something of value); a security deposit as well as other terms and conditions such as insurance, pets, utilities, holdover ),  etc… 

The term holdover refers overstaying the term of the temporary lease and is found only in the Seller’s Temporary Lease agreement.  A disproportionately large daily amount is usually placed in that area to discourage the tenant from overstaying the lease. 

It is very important that good communication by the two parties are established so as to make sure that proper insurance, utilities and oversight is maintained.

While, this is often a great tool that may help both parties reach a good negotiated contract; there are times when things can go very wrong.  In my practice, it is stressed to my client that pre-closing walk through as well as a walk through after premises are vacated are essential.  All deficiencies must be documented and documentation of these conditions relayed in writing to the other party, to the agent and to the title company. 

If the tenant decides to move out prior to the agreed date on either document; doing so must be in writing and documented to all parties to the transaction inclusive of the title company.  The landlord must be made aware so that a final walk through can be completed.  Insurance and resumption of utility services activated and return of the security deposit is made.  The landlord is under no obligation to pro rate the rent if the tenant decides to vacate early.

A case study: a seller has a temporary lease but decides to vacate early.  He neglects to notify the landlord who just happened to be in town and noticed that the premises had been vacated.  When he entered the premises, he noted that the water line to the refrigerator was not properly capped.  He then puts a plastic bag over the line and fastens it and leaves to go back home.  The plan is to move in two weeks later. The family returns with their moving truck to a flooded first floor. So who is responsible? Clearly the tenant should have notified the landlord that he was vacating and it is also clear that he caused the damage when he disconnected the fridge without properly capping the water line.  But, there is contributing negligence on the part of the landlord since he was aware that the tenant did not cap the water line and did nothing to mitigate the damage. 

I am a Real Estate Broker in the North Texas area.  It is difficult to counsel the landlord on these issues but in my practice, my greatest concerns are when a buyer is seeking to move in prior to closing.  Of course, every decision is a case by case basis and much depends on a multitude of factors and options. 

Please feel free to contact me if you are interested in buying or selling in the North Texas area.  We also provide assistance to landlords and tenants in leasing and renting.

I hope that you have found this blog helpful. 

 

 

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