Because of our strong real estate market, lenders, appraisers, title companies and other businesses associated with a real estate transaction are often overwhelmed to a point that a transaction might not close on time. Sometimes it becomes apparent that one of the parties to the transaction is going to be homeless for a short period because of the timing of the closing.
It is at this point that it may be necessary to ask the seller if the buyer can take occupancy early or in the case of the seller stay in the home for several days after closing.
A preoccupancy is sometimes necessary when the buyer of a home finds themselves in a situation where they cannot close on time because of problems with their loan, or perhaps title issues. In this situation the buyer asks the seller if they may occupy the home for a short period prior to closing.
A postoccupancy is the opposite of the preoccupancy. In this case a seller may ask the buyer to allow them to remain in the home for a period of time after the transaction is complete. This situation arises when the seller’s new home or rental is not ready, or other circumstances prevent him or her from moving for a short time.
The pre- or postoccupancy agreements are not an ideal situation as there are inherent risks to both sides, and each party should explore other options. In some cases, however, it may be necessary if both sides are willing. The key is that everyone is on board early and that it is done correctly. As with any agreement, it should be in writing.
Questions that both sides should ask themselves and each other are who is responsible for insurance, utilities, maintenance, and repairs during the period someone else is living in your home? These questions should be answered in the agreement so that there is no misunderstanding by either party. The amount of payment must be negotiated and included in the agreement.
Your real estate agent may be involved as they can prepare the proper documentation necessary to address the agreement. As in any situation where there are legal ramifications, it is always a good idea to consult an attorney if you have any misgivings about the arrangement.