CYA And The Beauty of The Post Settlement Agreement

                                                    I am rethinking how I have done my business for the last two decades.  I think the Post Settlment Occupancy agreement (PSOA)will now come into play for me and what is best for my clients on almost all contracts.

This will be important for the "domino effect" transactions.  These are the transactions where the consumer will have to sell one house in order to purchase the next home.

Typically the sellers move out and have the house vacant on the day of settlement date so the buyers, new owners can move right in.  In past markets we have written PSOA into contracts when sellers have had to have the proceeds from their current home to move to the next home.  I NEVER schedule back to back settlements anymore, unless it is one of my lenders that I know will have the loans done on time.  When a lender letter is presented on my listing and I speak with the LO, I still have my doubts and I structure the settlements with a PSOA.  Sometimes that is not the perfect answer, but it gives everyone a time buffer.

The reason for this is with the tight underwriting guidelines these days you never know what the underwriters are going to ask for at the 11th hour and 59th minute?  Then the purchaser has to get "one more document" and it will typically hold up the settlement.  This will make everyone in the transaction have to scramble to stay in the time schedule and that can't always be done.  I don't really care what the reason is, if this happens it is frustrating and expensive for all parties involved.  We are seeing it happen more and more in our current market.  With the PSOA, there is more time to firm up the financing in case there are last minute problems.

This can be a stressful time for all parties involved.  It is especially stressful for the seller and buyers, who's entire life is sitting on a moving truck.  They have taken off work, took the kids out of school, got a baby sitter.  If they don't make full settlement, everyone is staying right where they are are looking for increased costs of money and time to both sets of clients.

The benefit of the PSOA is it will make your transition as a buyer or seller less stressful. With the PSOA, you can have your settlement and then have a few days - whatever you negotiate- to take off of work, take the kids out of shool, and pay for the movers for one day, not a week.  The beauty is that everything is signed, sealed and delivered and you can now move forward with your moving plans.

In my market it is customary for the seller to pay the purchaser's daily expenses based on the new loan amount, taxes, insurance, and HOA fees.  This will probably be higher than the seller's current payment, but I guarantee you it will be cheaper than paying for the moving truck, movers, hotel rent if needed. 

If you are the buyer, you might be thinking, "how do I know the seller won't damage the house or they will get out?"  Ask your agent or settlement attorney.  There are provisions in the agreement for these details.  In our market, we will have the seller leave a deposit with the settlement company so you can then do a final walk through to make sure the house is in the same condition as when you settled.  The security deposit will protect you, the buyer, from any damages the movers may have done during the move.

Let's face it, moving day is stressful enough, using a PSOA might be able to help make it a better process.  At that point, the house is vacant, cleaned, and ready for you to move right in and get on with your life!!