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3 Things to Remember About...

Things to know about sale-leasebacks, using recording devices, and conducting criminal background checks.

Spring
2022

Sale-leasebacks

When home sellers need to retain possession of the home for a few days— or longer—after the closing:

  1. Put it in writing. Buyers shouldn’t let sellers retain possession of a home for any amount of time without an agreement in place that lays out all the conditions.
  2. Check insurance coverage. Generally, as the new homeowner, buyers are responsible for any damage after closing, but sellers aren’t off the hook and should convert their homeowners policy into a rental policy for the duration of their post-closing possession.
  3. Get the lender’s approval. Many lenders won’t accept leaseback agreements that are longer than 60 days, at which point the home could be classified as an investment property.

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Use of Recording Devices

If your sellers use audio or video recording in the course of a home sale:

  1. Know your state’s law. Most allow video surveillance without consent, but hidden cameras may require notice; some states require the consent of all parties for audio recording.
  2. Address it in the listing agreement. Require sellers to disclose any devices, warn them of the legal risks of using surveillance devices, and require indemnification for any unlawful surveillance.
  3. Disclose it in the listing. Note in the MLS any known property surveillance measures.

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Use of Criminal Background Checks

If you do criminal background checks on prospective tenants:

  1. Know your liability risk. Housing providers risk liability if their policies predictably would result in negative impact on groups protected under federal fair housing law.
  2. Have a written criminal history policy. Apply it consistently, don’t ask about or consider arrests without convictions, and avoid blanket bans on applicants with a criminal conviction.
  3. Document housing decisions. If you reject an applicant and your decision is called into question, you should have a record showing why the decision is consistent with your policy.

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Note: Be sure to consult qualified legal counsel when developing policies and investigating complaints.

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