What to Do When the Buyer Requests Early Possession
Once in awhile a home buyer will ask/request in their offer to take possession of the home before the official closing date. Most real estate professionals discourage this as it can be a big risk to the seller. So what should you do?
Here are some things to consider with the buyer taking early possession of the home.
Until the home sale is legally closed and the money is officially exchanged to the right parties, the house is still legally in the possession of the seller. Allowing the buyers to live in the property while you still legally own it can be troublesome. A home sale has the potential to fall apart at any point up until those final documents are signed and the money is where it needs to be. Things can happen like the buyer being unable to get the loan to go through for a number of reasons. The inspection results cause the buyer to back out. There could be a lien, encroachment, or easement issue that comes up in the title search not allowing the home to be sold. There are many reasons that would cause a home sale to fall apart.
Letting the buyers live in the home before the final sale can give them the opportunity to decide they don’t love the home as much as they thought they did before the deal is closed and they could walk away. Even if it means giving up their earnest money to do so. The buyer may decide they want the seller to make more repairs than initially agreed upon before signing closing documents.
It also means legally committing to two home payments as you are still responsible for the mortgage currently inactive status on the home.
If You Agree Make it Legally Binding for Your Protection
If you decide to let the buyer take early possession of the home, even though it is risky, make sure to write some protections with a written lease that will help to protect you should something go wrong.
Draw up a legally binding lease agreement as an addendum to the sale contract or in a separate agreement. This is where the help of a real estate attorney is essential. They will help you with what specifics the lease should include and how it should be worded to prevent loopholes.
Some things the lease should address include:
A daily rate the buyer will pay the seller for granting the favor of early possession and how that amount is to be paid.
The responsibilities of both parties in the agreement
What will happen if the buyer for any reason decides to make changes to their offer or back out of the purchase or wants to make changes to the home before closing.
What will happen in the case that closing is delayed or does not happen? This should include how quickly the buyer will be expected to leave the home and what consequences will result from not vacating in a timely manner.
It is not recommended that a seller ever allow a buyer to take possession of a home before it is legally official. In this seller’s market, it is not uncommon for buyers to sometimes make interesting requests due to the competitive nature of things. If you do decide to grant this request make sure you have all of your ducks in a row, a least in as close to a row as possible.
For more information on selling a home in St. George and surrounding areas please contact me any time.
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