Can a Seller Rent Back Their Home After a Naperville IL Short Sale

Can a Seller Rent Back Their

Home After a Naperville IL Short Sale?

Can a Seller Rent Back Their Home After a Naperville IL Short Sale?

Can a Seller Rent Back Their Home After a Naperville IL

Short Sale?


In most cases, the short answer is ‘No’. When you start your paperwork with the lender, they will have all parties sign an Addendum stating that the Seller must vacate the property at or prior to the close of escrow. It will also specifically state that the buyer will not enter into a rental agreement with the Seller after escrow closes. An important agreement you will receive is the Arm’s Length Agreement (ALA), please go over this agreement with your lawyer and real estate agent to make sure that you understand all the terms and conditions it contains.


Once a buyer has purchased a home in a Naperville IL short sale, it's his or her right to do with it as he or she pleases. The rights of ownership of a short sale home are the same as they would be after a traditional sale, with a few exceptions. It is the buyer’s decision to live in the home, resell it, or rent it out to whomever the buyer prefers, including petition the lender to allow them to rent to the former owner. However, the final decision is up to the lender.


If the Buyer and the Seller are not family or related in any way, and wish to pursue this line of action, both parties must disclose their intention to the lender (with the help of lawyers) prior to signing the Addendum or any agreement for that matter, to try and negotiate these terms. A full disclosure to your lender is essential. Failing to do so and renting back to a Seller is considered fraudulent and could rescind the short sale after closing.


If, on the rare occasion, the lender agrees in writing to allow the seller to rent back the house from the buyer, then the new owner needs to make sure that the previous homeowner, and now their tenant, is able to meet the monthly rental amount. Keep in mind that the homeowner defaulted on their monthly payment to the lender to begin with and went into foreclosure.


The best thing to do is for new owners to request for a credit report and verification of the tenant’s income. If the tenant can’t account for his or her money, then the new owners should think twice before signing a lease contract. If the credit report shows that he or she has been in arrears on debts that he or she should have paid.

If the new homeowner is satisfied that the seller is capable of making monthly rental payments, then the benefit of renting a Naperville IL short sale home to the former owner is mutually beneficial. The home will start generating income immediately, and in the long term, the home will appreciate in value.


The best thing to do is to talk to your lender and check the fine print if there is any clause stating that the Naperville IL short sale seller is not allowed to purchase or rent back the home. If you really intend on renting back your short sale home, make sure to formally disclose it to your lender to avoid being accused of fraud and get their approval in writing.


Talk to an experiencedNaperville short sale agent or call me,

Teresa Ryan at 630-276-7575. As a Broker/Owner of Ryan Hill Realty - www.RyanHillRealty.com,

I have the experience and tools to help you sell your Naperville short sale home.

http://www.ryanhillrealty.com/

Can a Seller Rent Back Their Home After a Naperville IL Short Sale

Real Estate

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