Buyer Possession Before Closing
Pros and ConsPossession of a home usually changes from seller to buyer at closing, but in some cases a home buyer asks the seller to grant possession before closing. Where I work we sometimes see this request when the buyer must move before a loan can be processed.
Sellers make the final decision as to whether an early buyer possession makes sense for their transaction, but you'll find that seller's agents rarely encourage the situation. Too many things can go wrong.
- The loan might never be approved, or the sale might stall for other reasons. Then you're back to square one, trying to obtain another sale, but this time with a renter in place. In a perfect world the former buyers would vacate, but agents will tell you that sometimes it's necessary to take legal action to remove them.
- The buyers might feel the house is already theirs and begin to make changes--maybe changes you wouldn't appreciate. If the house doesn't close, you may be stuck with their "improvements."
- The buyers might start making a list of extra "repairs" that are needed before closing. Most often these aren't truly repairs, they're simply things the buyers would like to see changed. This can be especially frustrating if you've already gone through the inspection and repair process.
- Worst case, the buyers may trash the house. People who do that sort of thing are difficult to collect damages from.
Considerations for Early Buyer Possession
- Wording should include details about what will happen if the sale does not close on time--or never closes. How much time do buyers have to vacate? What will happen if they don't?
- How much rent will the buyers pay and when is it due? Do you want a security deposit?
- Buyers should agree they will not modify the home without the consent of the owner. If closing doesn't take place, buyers should pay to return the home to its former condition.
- Utilities should be the responsibility of the buyers, with all accounts in the buyers' names.
- Buyers are typically responsible for lawn maintenance and trash removal. They should agree to maintain the house in its current condition.
- Home sellers still own the home, so insurance for the structure and any items remaining is a seller responsibility. Buyers must insure their personal items.
- Buyers should not be allowed to sublet the house.
- Standard forms usually include a statement releasing sellers from liability if something negative happens to buyers while they are living in the house.
- Will pets be allowed?