From time to time, a closing date may not align with the desired timeline of the buyer and seller. Perhaps the seller needs a little more time to close on their new home or the buyer is displaced prior to closing with nowhere to go. In these instances, the parties may want to put together an agreement for the buyer to occupy the property in advance of closing or the seller to occupy the property past the closing date, also known as pre-closing or post-closing occupancy.
If the buyer and seller decide that they would like to agree to either pre-closing or post-closing occupancy, there are many issues to consider such as the following:
• If the buyer pre-occupies the property, what happens if the transaction doesn’t close?
• Who is responsible if the air conditioner or an appliance breaks down?
• Who is supposed to insure the property?
• If the seller occupies the property post-closing, what happens if they damage the property after the closing date?
• After a seller takes post-closing occupancy, what happens if the sale of their home is delayed and they don’t want to leave at the expiration of the post-closing occupancy agreement?
It is very important that all of these “what ifs” are addressed in any pre-closing or post-closing occupancy agreement. It is when these items are not addressed up front that they tend to become issues down the road. In a transaction that involves financing, it is also important to address plans for a pre-occupancy or post-closing occupancy agreement with the lender as many loans will not allow post-closing occupancy by the seller and require a buyer to occupy their new home immediately after closing.
If your buyers or sellers are thinking about entering into a pre-closing or post-closing occupancy agreement, it is very important that they engage a real estate attorney to inquire as to the legality of the agreement in their transaction and to protect their interest in the proper preparation of the agreements.
Sincerely,
Berlin Patten Ebling, PLLC
Article Authored by Jessica Featherstone, Esq. jfeatherstone@berlinpatten.com
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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