If a seller’s new home is not ready to be occupied, he or she might request to rent back the (former) house  for a short time. If the buyer is agreeable, as part of the sales contract, the seller agrees to pay rent equal to the new buyer’s mortgage payment (including principal, interest, taxes, and insurance). This common move-up strategy involves selling the existing home and having the seller continue to live in it as a renter until the new home is ready. For protection, the new buyer should execute a formal occupancy agreement that spells out the terms and conditions of the seller’s occupancy. Both buyer and seller might want to also consider signing a standard residential lease.

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HINT: A rent-back agreement may be triggered by the seller’s inability to schedule a moving van on the last day of the month when demand is particularly high.