Possession of Property by the Buyer Before Closing
By Sadiya Anjum
Ideally possession of a sold property by the buyer takes place after closing when the official ownership has been transferred. However in special cases the buyer may request the seller to let him move in early or move some of his possessions in. Early possession requires an occupancy agreement where the buyer pays rent on a weekly basis until closing.
A situation like this may arise if the buyer is required to move before a loan can be processed. Or perhaps the buyer has sold his old property to someone, who in turn has sold his property to someone else. In such a scenario the other parties may not be able to take possession until the buyer moves into the property in question.
The circumstances may be many but the question is should the seller allow it? The easy answer is no. The problems that may arise are several. The loan may not come through or the buyer may choose to back out the last minute. There may be other problems which may lead to the collapse of the deal. The seller may now have tenants on his hand who may cause problems when asked to vacate. Moreover it is difficult to sell tenant occupied properties.
Other problems may occur if the buyer decides to start making changes to the property. If the deal falls through, then you may be left with improvements you would rather not have and the buyer may demand to be reimbursed for the same. In addition the seller will now have to undo or redo the changes made before putting it up for sale again. In some cases, the buyer may wreck the place before moving out causing problems for the seller. There are so many what-ifs and problems that may arise if a buyer takes possession of the property early.
Even though these cases are rare, they do occur. The seller may feel like in a special circumstance, early possession should be granted. No matter who your buyer is it is wise to have an addendum to your purchase agreement detailing early possession by buyer. A standard contract addendum is usually available and can be accessed easily but if you prefer you may ask an attorney to draft it for you.
There are certain points that should be covered in the addendum. It should detail out the duties and responsibilities of both the buyer and seller. Firstly the rent should be mentioned, when it is to be paid and if any deposit will be included. The buyer should not sublet the property. If the deal falls through, how long will the buyer have before he is asked to vacate. If the buyer refuses to move out what action can the seller take? Make sure clauses indicate that the buyer is not allowed to make any changes to the property. If the buyer has to vacate the property then he must return the property to its former condition.
Utilities and the maintenance of the property should be the buyer’s responsibility. Insurance for the home is covered by the seller but the buyer has to insure his personal items. If the buyer injures himself on the property or any other such incident occurs, the seller should not be held liable. A clause about pets can also be included.
It is up to the seller to think of all possibilities and include them in the addendum. It is always better to be safe that sorry. Avoid allowing the buyer to take possession early but if the situation calls for it, make sure that you protect yourself legally.
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