When selling a property, there are many reasons why a Seller might need additional time in the home after closing. As a buyer, allowing the seller to stay in the home for a short period of time after closing may be the point that sets your offer apart and ultimately gets it accepted. As part of the contract negotiations, a separate post-occupancy addendum should be negotiated and signed. The addendum is not the written post-occupancy agreement, it is the part of the contract that confirms  each parties’ agreement to enter into a the post-occupancy lease agreement at or prior to closing.

What Is a Post-Occupancy Lease Agreement?

A post-occupancy lease agreement, (also sometimes referred to as a lease-back or a rent-back agreement) is a legally binding document that outlines the obligations and responsibilities of both buyer and seller as the seller continues to live in the property after the date of closing. For the protection of both parties, the agreement should explicitly submit itself to the governance of Florida’s landlord tenant law and therefore the Seller becomes the tenant, and the Buyer becomes the Landlord.

Why Is a Post-Occupancy Lease Agreement Important? There are dozens of reasons why a written post occupancy lease agreement is important, but below are a few of the most common reasons clients choose to have one completed.

1. Establishes Clear Expectations A post-occupancy lease agreement details crucial elements like the length of occupancy, rental payments, and responsibilities for utilities and maintenance. Just like any contract, without a written agreement misunderstandings will likely occur and could lead to adversarial consequences.
2. Submits Both Parties to Florida’s Landlord Tenant Law. A written agreement should explicitly submit itself to Florida’s Landlord Tenant law, for many reasons, but most notably so that all parties can avail themselves to the summary procedures and decreased costs associated with having any dispute heard in the County Court. Without a written lease agreement, the arrangement may be legally viewed as an unlawful detainer. The legal process to resolve an unlawful detainer will be under the jurisdiction of the Circuit Court and will take much longer and be much more costly to resolve.
3. Defines Financial Obligations. A written agreement will specify rent amount, due dates, maintenance responsibilities, security deposit and advance rent matters.
4. Incorporation of Continuing Maintenance Requirement. A well written post-occupancy agreement should incorporate surviving aspects of the purchase and sale agreement and provide limits on which the Seller remains liable for maintenance obligations. The seller, as tenant, should remain responsible for some maintenance obligations, but because the seller will no longer have homeowners insurance in place there must be an agreed upon maximum to that financial liability of the seller.
5. Landlord’s Liability and Renter’s Insurance. A written agreement will provide clarity on the scope of Landlord’s liability and, if the parties agree, will require the tenant to carry renter’s insurance with language sufficient to ensure landlord’s interests are protected.
6. Statutory Disclosures. Whether a landlord has a written agreement in place with a tenant or not, the landlord is required by law to provide certain disclosures to all tenants. A well written lease agreement should include all statutory disclosures regarding the tenancy.

Some Key Components of a Post-Occupancy Lease Agreement:

1. Incorporation of Purchase and Sale Agreement
2. Submittance to Florida Landlord Tenant Law
3. Term of occupancy period
4. Rent
5. Security Deposit
6. Assignment
7. Events of Default
8. Remedies of Default
9. Utilities, Maintenance, HOA matters
10. Renter’s Insurance
11. Hold Harmless and Indemnification of Landlord
12. Terms for vacating
13. Statutory disclosures

This article outlines some but not all of the main reasons why a post-occupancy agreement is imperative. Any time a seller is staying in the property after closing, whether for 1 day or longer, it is very important to have a written post-occupancy lease agreement in place for the protection of all parties.