Possession of a real estate property transfers from seller to the buyer upon closing. However, there are some cases wherein the buyer asks the seller to grant him or her possession even before closing. This is usually the case when the buyer’s apartment lease has ended or has already sold their current home and needs to find a place to live.
We believe that both the seller and the buyer should consult their lawyers about this, and voice out any concern about this early possession idea.
WHAT ARE THE RISKS?
Of course, if you are the seller, the final decision is totally up to you. As seasoned agents, however, we want you to know about some of the many things that could possibly go wrong:
- There could still be a mortgage underwriting problem even after their documents have been thoroughly reviewed. That means the buyer’s loan can still be denied. If this happens, you and your agent are back to square one. The problem here is that all too many times before, homeowners have had to take legal action just to get the former buyer out of the house.
- It is also possible that the buyer might create a list of “repairs” that he or she wants completed before closing. The thing is, those may not even be genuine problems that need fixing but some projects or changes that the buyer wants.
- Another possible scenario: The buyer might start to feel that the house is already theirs and make some changes. While that may not be something to be concerned about, it might be if the house doesn’t close!
- And of course, there’s the worst thing that could possibly happen – the buyer may trash your house!
Should you decide to agree to early buyer possession, you have to remember to have a written agreement with a detailed description of the duties and responsibilities of both parties. Your real estate agent will, of course, provide you with the standard contract addendum, covering early buyer possession. You can also choose to have your lawyer draft the document.
Here are some considerations for an Early Buyer Possession Agreement:
- Details about what will happen if the sale doesn’t close as expected
- The buyer agrees that the home will not be modified in any way without the owner’s consent
- How much rent should be paid and whether or not there would be a security deposit
- Should the utilities be included in the rent or should the accounts be transferred to the buyer’s name
- The buyer is not allowed to sublet the property
- A statement that releases the seller from liability should something happen to the buyer before closing
- Pets – should they be allowed or not?
Know that from a listing agent’s perspective, we believe it is not wise for sellers to allow early possession, as doing so would allow buyers to poke around and rethink their decision about purchasing the house. Remember, until the closing is done, buyers can still cancel!
If you need more helpful tips and guidance on how you can have a smooth transaction, you can count on The Right Wans to be there for you – from showing to closing!