How common is post-closing possession?
Just wondering how common it is to let the seller remain in a property after you close on it. Thanks.
Just wondering how common it is to let the seller remain in a property after you close on it. Thanks.
The above posts mentioned how a post closing occupancy helped the seller (e.g. they had not closed on the property they were going to move to).
It could also help the buyer. Our buyer had a great mortgage rate locked in and the lock-in was going to expire. She would have had to pay $900 to extend the lock-in. We let her close early (and asked that she pay 50% of the per diem, since it was a lot more than our current housing cost would have been). We stayed about 2 weeks post closing until we could move in to our rental.
Everything was pre-arranged through the lawyers, just like the other posters have said.
I had a nightmare situation…
The sellers asked me (casually) if I would give them a few days to move out. I “casually” said yes, then informed my attorney. I wanted to protect myself for several reasons:
1) once you close, you are fully responsible for property. That means that any damage incurred rests with you. any liability rests wtih you, etc.
2) what if sellers don’t leave?
etc. Anyway, my lawyer and sellers’ lawyers drew up the paperwork. I gave them 4 days. They were to put $ in escrow with their lawyer *in case* there were damages or they did not move out when they said they would. They would pay a per diem on the interest on the loan and a per diem for the maintenance (all things that I would be paying, while not living there…)
the per diems came to about $50 a day.
Sellers were furious!!! Lied and said I was kicking them out. Misunderstood terms of occupancy agreement…it was a mess.
I ended up not charging them the per diem. But then I had an issue where they said they were all moved out, but had never cleaned out the storage room.
My point is: do it through your lawyer!!! You don’t necessarily have to charge them for staying, but you do absolutely need a contract that holds money in escrow and state s when they will be out and how the terms change if they are not out by said date.
Please use your lawyer…that’s what we pay them for.
good luck
I bought a house upstate a few years ago that needed work; the deal almost tanked when the seller’s wife was diagnosed with cancer just before the closing and couldn’t cope with packing and moving and arranging their new house. I told them they could stay as renters for a max of a year, and we put it in the contract and closed the deal. They stayed on for eight months while she was in treatment, recommended local tradespeople (and told me who to avoid), helped supervise some of the exterior restoration work, and introduced me to everyone in town. It was a good introduction to the area, and we wound up great friends.
“don’t do it–too many problems. Not everyone’s situation is as ideal as the one described by 7pm poster.”
nonsense.
this person doesn’t know what s/he is talking about.
everything is drawn up by your lawyers. you don’t just have a verbal agreement.
sometimes your closings just don’t line up.
when i sold my condo and bought my house, i had to close on my condo before i could close on my house. i stayed in my condo for a few days and paid rent to the buyer.
everything was specified in the contract. perfectly legitimate.
Sandy is right – it’s very common. Sellers often have to close on the old place before their new place is ready, and they will cover your mortgage payments and other expenses until a set time agreed upon by both parties. Typically, if a seller has to remain in your new place past the deadline agreed to, his “rent” goes up by a very hefty margin for every day past the move-out date. We’ve been in this arrangement as both buyer and seller, and as long as the other party hasn’t been especially difficult to deal with in regards to other aspects of the sale, I’d say go ahead, making sure your lawyer draws up an agreement with adequate compensation for you.
This scenario is common and is called a leaseback. The buyer closes but the Seller stays in the house. I bought a house where the sellers stayed for a month because they were waiting to close on their house. This is a win-win situation.
The sellers pay to stay in the house and not just the amount of the mortgage payment. Utilities, taxes, insurance, prepaid interest, extra in case the stay is a little longer than expected (because almost no one closes on time) and a little more for incidentals (i.e., wear and tear past the closing date) are all figured out by the buyer’s attorney, and put into an escrow with him. The amount is divided by the assumed number of days the sellers will stay and is written into an agreement as a per diem rate. The full amount is taken out up front at the closing table. Also, the sellers have to notify their attorney who will notify your attorney before they leave so you can do another walk-through.
Once you have a well-written agreement, you can look on the calendar count the days and figure out how much you will get back when you do take possession of the house.
Sandy
don’t do it–too many problems. Not everyone’s situation is as ideal as the one described by 7pm poster.
extremely common
I bought my house from a lovely old lady who needed a week or so after closing to leave. She and her family lived in the house for over 50 years. I did not charge them a penny to stay a week. Her lawyer was in shock and asked her at the closing was she sure she wanted to sell her house to a nut. It all worked out well and we’ve become friends.