Rent Back

Updated 2 months ago ​by Alex Wolff

What it is:

Rent back, or leaseback, refers to an arrangement whereby the seller will stay in the house past the close of escrow, paying the new owner a “rent” or “lease” for a predetermined period of time at a predetermined rate.

What to know:

The rate and length of rent back is ultimately negotiable by both parties, but the rate tends to be based off of the combined total cost of Principle, Interest, Taxes, and Insurance (known as ‘PITI’, pronounced “pity”). Calculating rent back based on PITI is standard as it accurately reflects the total of any mortgage payments, property taxes, and expenses the new owner would expect to pay and can easily and transparently be pro-rated to the amount of time needed by the seller.