Senate committee advances bill to let home sellers collect deposits for short post-closing stays

The Senate Local Government and Housing Committee on Thursday advanced a bill that would allow buyers and sellers to use a security-deposit mechanism when a seller temporarily remains in a home after closing.

Supporters said SB54 addresses an unintended consequence of a statute capping security deposits for rental agreements: when the cap is applied to short post-closing occupancy agreements, buyers are left without a practical way to secure compensation for move-out damage, so parties often ‘manufacture’ rent on paper to enable a deposit. Senator Snyder, who sponsored the change, described the measure as a narrow fix that ‘‘draws a clear line between ongoing rental leases and short-term post-closing occupancy agreements.’’

Sponsors and multiple real-estate witnesses told the committee these post-closing occupancy agreements — often called PCOAs — typically last only days to weeks and are tied directly to sale transactions, not intended to create landlord-tenant relationships. Cooper Thayer, a licensed broker, testified that when parties set rent to $0 to reflect the economic reality, the statutory deposit cap (which applies as a percentage of rent) leaves buyers with no lawful deposit, encouraging paperwork workarounds that can inflate recorded sale prices and distort comparables used for appraisals.

Other brokers and agents said deposits in that limited context protect buyers from damage during move-out and help transactions proceed without delay. Committee members confirmed there is already a 60-day delineation in statute that generally limits the duration of these arrangements.

The committee adopted amendment L001, moved by Vice Chair Snyder, to change the bill’s implementation date to accommodate form updates by the Division of Real Estate. With the amendment, the committee voted unanimously to send SB54 to the Committee of the Whole with a favorable recommendation.

The committee recorded no substantive change to landlord-tenant policy, sponsors said; rather, they framed SB54 as restoring transactional clarity so parties can reflect their intent in written agreements without being forced into legal workarounds. The next step for the bill is consideration by the full Senate after Committee of the Whole review.