Current owners want to 'rent' for a week after settlement. Issues?

Hopefully this is the right section to ask this. I had a quick search and couldn't find any information on this. I'm sure it's been asked but had no luck finding anything.

I've purchased a house from a young couple who as far as I'm aware have purchased a new home with a settlement on the same day as my settlement.

Settlement is in 4 weeks.

Today I got a call form the REA asking if I would be interested renting my property to the current owners for a week to give them more time to move their stuff to the new house.

From what I've seen of the state of the house and what I know of the owners I don't have any major concern they will damage it and/or do anything stupid. But obviously you never know for sure.

I was thinking if I was to go ahead with it I would:

  • Charge ~$400 for the week (I would normally expect $310 a week rent).
  • Ask for a 'bond' of say $1000 paid to me, to be returned at the end of the week on my inspection.
  • Have something in writing between me and them to say that any damage etc will be covered by them, and that they have to be out by a set date/time.
  • I'd also put a clause in writing that says if my agent wants to show potential tenants through that week that they will allow it (say 1 or 2 times that week)
  • That they would not disconnect their electricity/gas etc until the week after (so any extra utilities costs would be absorbed by them).
If I was to do it it seems logical to do it between them and I, not involving the agent.

Basically not considering it as a tenant as such but more that they are boarding under my roof for a week.

Settlement would still go as usual with the inspection, hand over of keys etc. Then I would give them one set of keys to use that week.

Is this a terrible idea? Anyone been in a similar circumstance? Am I being too harsh?

The main reason I think it would be beneficial to me, apart from the week of guaranteed rent, is that I could use that week to shop it around to potential new tenants.

Any feedback would be appreciated.

Cheers.
 
I don't see an issue with it. It happens quite often.

You can ask your solicitor to include some conditions/terms in the contract as part of the conveyancing process.
 
IMO, too much mucking around and just doing a pre-settlement inspection followed 1 week later by moving out inspection....not worth the effort.

Just delay the settlement by 1 week. If they can't get their act together in the 4-6 weeks they've had since exchange, then likely 1 more week is not going to help and they'll drag on and on.
 
Thanks for the feedback.

Wouldn't moving settlement by a week be a major hassle? I would think it would affect paperwork, loan etc?

I don't see the big issue doing 2 inspections. The property is a 2 minute drive from my current place of residence so not hard to get there.

But I do appreciate the feedback. I've asked my conveyancer for her opinion as well. Still not sure if it is really worth it.
 
I had a similar situation where I sold an IP and the buyers wanted to move in faster and asked for settlement 2 weeks earlier. Alternatively they were willing to rent the house from me if early settlement was not possible.

I thought about the amount of rent to charge and the hassles involved and in the end I could not be bothered and so spoke to my bank/conveyancer and asked if they could settle faster. They were able to accommodate this with no charge.
 
I vote to allow them to rent for the week.
Like you say, gives you rent for the week..you have a bond and you can show thru prospective tenants.
 
I wouldn't even consider letting them rent for a week. The potential headaches you could endure far outweight the one weeks rent. What if they still haven't moved their stuff after this week? What if they haven't actually settled on another place and are biding time to find something else that could take weeks/months with no intention of vacating until this occurs.

I've had a very similar situation occur with one of my sales and the tenant refused to leave the property. Is this risk worth it for $400 when you can just push settlement back a week and not have the holding costs for that week?
 
I also would not get involved in it for the sake of $400. Too many things could go wrong.

Many people sell and buy on the same day and have to move that day, lock stock and barrel. We have done it several times with no issue. What is so special about this family that they cannot do that?
 
One vote for not 'renting' for a week.

I would say the effort of putting in place a written agreement, collecting bond and then refunding it, arranging an additional inspection etc would not be worth it, particularly if the vendors overstay their week !

On the flip side when I sold once the purchasers wanted to move in before settlement and pay me rent. Ended up turning them down as even straight after the auction they were whinging about some petty things such as the garage door not having a padlock.

Anyway, not worh the potential hassle in my opinion. I would push settlement back.
 
Let them stay as long as they want at $400 week.
What difference does it make whether it is them or other tenants?
Especially if they have paid a bond, and you have a Fixed Term Lease etc
Just keep renewing it, if needed.
 
I'm in the 'just push settlement back a week' camp. Or make it two weeks. Saves so much mucking around.
You're doing them a favour, so tell them you expect that the agent will be able to show prospective tenants (serious contenders i.e. not do an open house) during that week.
 
Let them stay as long as they want at $400 week.

I get a feeling though based on what I'm told (which I have no reason to doubt) that they really would only want one week to allow them to move their stuff to their new place gradually over the week instead of rushing in one day (I believe settlement for both places is at the same time on the same day)

I've thought about it today and it's probably not worth the hassle for one week. I will offer an extended settlement but otherwise I'll leave it be and just hope to get someone in ASAP.

Thanks guys.
 
I get a feeling though based on what I'm told (which I have no reason to doubt) that they really would only want one week to allow them to move their stuff to their new place gradually over the week instead of rushing in one day (I believe settlement for both places is at the same time on the same day)

I've thought about it today and it's probably not worth the hassle for one week. I will offer an extended settlement but otherwise I'll leave it be and just hope to get someone in ASAP.

Thanks guys.

Maybe they need the money from the sale to pay for their new purchase.
A delay in settlement won't help then.
 
They've come back asking if I'd reconsider. They want a week to fix a few things in their new property before moving (they have a little child).

They've offered to do it by the book getting a licence agreement written up. Offered rent above market value for the week and a bond.

If they are happy for my agent to show potential tenants through the week before settlement and during the week they are living there I think I will agree to it.

A bit of a win-win really.
 
It's a win-win situation if all goes to plan, however what if it doesn't?

What if the property they've purchased takes longer than anticipated to have the works done and they don't pay rent for this period? What if the works take longer than anticipated but you have a tenant lined up that can not move in because they won't give vacant possession?

What if there are issues with their new property at pre settlement inspection and they don't settle?

All in all, what's the difference between an extended settlement from their end? This still gives them time to do the repairs without exposing you to risk.
 
All in all, what's the difference between an extended settlement from their end? This still gives them time to do the repairs without exposing you to risk.

They probably need to settle the same day so funds from their sale are available for their new purchase, but what's wrong with staying with relatives or a motel for a week, or living with a "less than ideal" house for a week?

Gosh, haven't we all had to move the same day we settle and do it a bit hard for a week while we find the box with our cutlery and loo paper?
 
They've come back asking if I'd reconsider. They want a week to fix a few things in their new property before moving (they have a little child).

They've offered to do it by the book getting a licence agreement written up. Offered rent above market value for the week and a bond.

If they are happy for my agent to show potential tenants through the week before settlement and during the week they are living there I think I will agree to it.

A bit of a win-win really.

We did this. The property we purchased was someones PPOR that became our IP. They wanted to rent back from us for 4 weeks so they had time to reno their new place.

They needed settlement funds from us to complete their purchase so they could commence the renos.

We had our solicitor draw up the license agreement at the sellers expense. In that agreement we formalised the rent amount, the bond amount, the lenght of the agreement etc. We also wrote into this agreement that we wanted 2 OFI's or the ability to bring through interested parties twice a week for the duration of the agreement.

All monies changed hands as part of the settlement process, so there was no rent collection. In our agreement we wrote into the contract that the bond was to remain in our solicitors trust account until we authorised the release of the monies (ie when they moved out and we were happy with the final inspection).

All went fine - we had absolutely no problems at all, and I'd do it again if the opportunity arose in the future.

One question to pass back via the RE would be is really one week enough? If the seller understands that settlement monies take care of the rent, you may be able to extend the agreement for another week or 2 depending on what renos need to be done. We've found that people have this weird notion of cash - if it's done at settlement they don't notice, but to go and hand over cash each week is "BIG DEAL" Which is what happened to a family friend - she settled on the sale of her place 4 weeks before her purchase and wouldn't pay $350 a week rent not to move for the 4 weeks, until it was explained that it could all happen during settlement and she wouldn't have to physically find money every week - go figure!

Cheers
Buddybee
 
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