Important Facts To Know About Leasebacks

Here’s what both buyers and sellers need to know about leasebacks.


Since we’re in a pretty extreme seller’s market, leasebacks are becoming more and more popular. Today I’ll talk about what leasebacks are, how they’re used, and what you need to know about them before you form an agreement.

In short, a leaseback is when the buyer of a property allows the seller to live there for a certain amount of time after the transaction has closed. Essentially, the seller is renting the property they just sold to the buyer. Usually, this is to allow the seller more time to find another home to purchase themselves.

“The seller is considered responsible for repairs for as long as they stay in the house.”

In the seller’s temporary residential lease, it states that the leaseback period cannot be used for longer than 90 days. After that point, you’d have to use a regular lease to secure the property. It’s also important to know that if there is a lender involved with the transaction, they will say that the leaseback period can’t be longer than 60 days.

Many times, the seller wants the leaseback for free, and as you can imagine, buyers don’t necessarily like that. They’re already making a monthly payment on the home, after all. Just know that the cost of a leaseback is negotiable. 

Additionally, an earnest money or security deposit is a good idea to protect the buyer from potential damage after the seller moves out. Now, the security deposit isn’t a blank check for the buyer, nor is it something that the seller has to worry about getting back unless there are bona fide repairs, like if the buyer finds a hole in the wall from one of the movers. The seller is considered responsible for repairs for as long as they stay in the house. In terms of insurance, the seller needs to convert their home insurance and renter’s insurance, and the buyer needs to be insured as well. If they’re using a loan, they will be covered.

Hopefully this gave you a clearer understanding of what leasebacks are and how they’re used by today’s homebuyers. If you have any questions about this or other real estate topics, don’t hesitate to give us a call or send an email. We’d love to help you.

Categories: Listing / Buying Tips.