We discussed this yesterday in regards to the difference in the possession date and the closing date. Some buyers may assume that these two dates are one and the same, but in some cases, they are not.
If the seller would like to stay in the home an extra couple of days after the closing to give them time to get all of their things out and the house cleaned, it is called a seller rentback. If a buyer would like to start moving their things into the home prior to closing, it is called interim occupancy.
What is Interim Occupancy?
Interim occupancy is an agreement that is an addendum to the purchase contract between the buyer and seller that addresses the possession date in reference to the closing date. This addendum is required when a buyer requests to have access to the property prior to the closing.
Interim occupancy is sometimes necessary where one of the following issues is present:
The seller has already moved out from the home or will be able to be moved prior to the closing date.
The buyer's closing date cannot be completed prior to the buyers' needing to vacate their current living arrangment, i.e. the buyer did not allow enough time for the lender to get everything done, or it is a quick closing.
The buyer does not have the ability to move all in one day due to lack of assistance or the weather conditions.
The buyer is moving from out of state and the moving truck will be here on the closing date. If the closing date is delayed even one day for one reason or another, the buyer will have to pay a fee for storage of their belongings and they may have to wait several days to a week to have their furniture delivered. Moving companies can be very rigid and inflexible as they have schedules to keep!
An interim occupancy agreement sets up the terms of "temporary" residency prior to closing.
It will address when the buyer will be able to receive the keys and occupy the property as well as the items that the buyer will need to provide to move into the home.
- A copy of their homeowners' insurance effective the date of the possession to protect their personal belongings
- They will need to release all of their financial contingencies as well as show that the buyer of their current home has released their contingencies as well.
-They will need to perform their final inspection and release that contingency. This means that anything that happens after they move in, i.e. the furnace stops working, it is no longer the seller's responsibility to make any repairs.
-They will agree to the amount of rent per day that will be paid at the time of the closing. This is calculated based on the taxes and interest cost stated in the purchase contract on a per day basis.
-It will outline the length of the agreement. There will be an end date that is a few days after the proposed closing. If the closing has not happened by that date and the buyer is not able to complete the closing, they have 7 days to vacate the property.
-The buyer cannot make any alterations to the property without written consent from the seller; no painting or other remodeling prior to the closing.
-And finally, this agreement does not constitute a landlord/tenant relationship. It is only intended for a temporary occupancy period prior to closing due to unforeseen circumstances.
The best way to insure that there is no issue is plan for the worst case scenario. The worst way to handle it is to wait until the last minute to try to negotiate an interim occupancy. It is frustrating for all parties involved.
When you meet with me to discussion your personal living situation, we will be sure to include those plans into your purchase contract. Call me for your free initial buyer consultation today and let's get you on your way to owning your relationship.