Selling A Home and Renting It Back
Selling a home and renting it back can be a risky venture and for joint owners of a property the process may become even more complex. Not only must both owners agree to the sale, but then decide if both or only own will become tenants in the same property. Choosing this "leaseback" option usually only occurs when owners are faced with the threat of repossession and need the ready cash that is offered. Generally these sales are made to companies, and then either the company or a designated individual becomes the landlord. Unfortunately there is often little regulation of these rent back/leaseback schemes so there may be considerable risk involved.
Agreeing on a SaleAgreeing to sell a home can be difficult, but it should not be impossible for joint owners. In the big picture, the first step is agreeing to sell and the next is for the joint owners to accept an offer. If both joint owners are named on a deed then they must both agree to a sale for it to legally go through. However, there may be some options if one owner wants to sell and one does not. For some owners there may be the possibility of going to county court for an order that either forces or postpones the sale of the home if it is believed that the other owner is attempting to accept an inappropriate offer. For example, an owner may be attempting to accept an offer that is too low in order to sell the home quickly. This is a particular risk when seeking to sell in order to rent the home back. However, an owner may also attempt to postpone a sale by refusing a legitimate offer and a court order may be needed in such an instance. As the process of going to court requires time, energy and possibly monetary investments, it is advised that joint owners try to make decisions between themselves if at all possible.
The Benefits of Selling a Home and Renting It BackThough it is risky, selling a home in order to rent it back does have some benefits that may tempt owners. The most obvious benefit is selling your home quickly. When a rent back/leaseback schemes work fairly it means that homeowners sell their properties at fair market values and then simply rent them again for a fair market rent (per week or per month). For some homeowners turned tenants this means there is no need to worry about packing up possessions, changing decorations, engaging the services of moving companies or wasting their time looking for suitable rental accommodation. It also means that individuals do not need to alter their commute to work, children do not need to change schools and life can generally carry on uninterrupted. Unfortunately, this is only the best case scenario in terms of rent back/leaseback schemes. If the company involved is not above board then a host of drawbacks may come into play.
The Drawbacks of Selling a Home and Renting It BackSadly, rent back/leaseback schemes are not always above board and they can go very wrong for the homeowners involved. The offered price for the house may be well under fair market value. The level of rent that is asked may then be above fair market value and sharp rent rises may also come into play. Some companies also demand that sellers turned renters agree to a time limit for their tenancy, meaning that at the end of this time not only can the rent be raised but the tenants may find themselves "evicted" or their lease un-renewed by their landlord. There is also the risk that the landlord himself may be unscrupulous and may not even pay the mortgage as he agreed, leaving the home open to repossession and the tenant at the mercy of others' decisions.
Joint owners may consider selling their home and renting it back if they are in bad financial straits. If you are considering this option make sure you solicit legal advice before making any decisions. Contact Citizens Advice (www.citizensadvice.org.uk) for free assistance or a referral to low-cost legal help.