Seller rent-backs are used when the seller, for several reasons, needs to occupy the home after escrow closes.
This usually happens when the seller has logistical reasons that prohibit them from vacating the property after a normal 30-45 day escrow. Perhaps they need more time to move, or need more time to find a home of choice.
Rent-backs can be a deal-saver in certain situations when there is a wrench thrown into the escrow process due to move-in/move-out logistics between buyer and seller.
There is a proper form to fill out for this purpose that is part of your California Association of Realtors standard forms called a Residential Lease After Sale.
The important thing to remember is that the buyer's lender will, in most cases, either not allow a rent-back longer than 30 days, or perhaps not allow a rent back to be part of the contract altogether.
This probably stems from the fact that the buyer has agreed to purchase the home and obtain a loan from the lender, stipulating that it will be there primary residence. And anything that smells like a rental is a different situation to the lender entirely.
Be sure to check with your lender with their guidelines in this matter.
It may be best to try and write the longest possible escrow period that the buyer's lender will allow, if that will help the sellers moving logistics without having to deal with a rent-back at all.
If it's absolutely necessary, some people have found a lease solution to be drawn up completely outside of escrow. But once again, you may run into trouble with the buyer's lender if this is not handled properly.
The amount of rent is calculated by either agreeing to a price that is based on comparable closed leases in the area, or by calculating the new buyer's PITI (Principle, Interest, Taxes, and Insurance) per day to calculate a monthly rent-back amount.
Just remember, when this happens, the new buyer of the home by default, puts themselves into an applied landlord/tenant scenario, which creates a different legal spin completely.
