Can the Buyer Move in Early? Occupancy Prior to Closing

Reblogger Gita Bantwal
Real Estate Agent with RE/MAX Centre Realtors

Attention home sellers ! Please read this post before you agree to allow the buyers to occupy the home before closing.

Original content by Fred Griffin presently on Leave of Absence Florida Broker BK436788

     Can the Buyer move in early?  The Closing is only a week away.  The house is vacant.  Inspections have been completed, the loan is approved, everything else is in order.  The buyers moved out of their previous home last week; they are staying in a hotel.  All of their belongings are in a moving truck.  The Buyer wants to move into the house early.

     What can be the harm?   

 

 

     When this question is posed to a Seller, a flashing red light and an alarm should go off.  "Early Possession" might result in serious legal and financial problems for both the Buyer and the Seller (and the real estate Brokers involved in the sale).

     If the parties agree to let the Buyer take Early Possession (also known as Occupancy Prior to Closing), you should see a real estate attorney for legal advice.  More on that in a moment...

 

 

   Here are some potential "Worst Case Scenarios" that could occur if the Buyer moves in early:

  

     1.  Buyer Damages the House

          The wife drops a heavy cast iron pan into the white porcelain kitchen sink, creating a large chip.  At the same time, the husband is backing the car up the driveway.  He accidentally crashes into the exterior of the house, causing serious damage.

          Who pays for these repairs?  Will the Seller's insurance cover it?  If it does, who pays the deductible?  What if the Buyer says, "We don't want to close until these things are repaired", and no contractor or repairmen is available before the scheduled closing date?

     2.  Buyer's Remorse

          It seemed like the perfect house when the Buyer made the offer.  But now that they have moved in, the Buyers realize that they don't like the floor plan.  Or, they were not aware that you could hear the rumbling sound from the highway that is just over the hill.  They call their real estate agent and say, "Uh... we have changed our mind.  We don't really like this house after all.  Tell the Seller that we want to back out of the contract."

     3.  Buyer Gets Injured 

          Little Timmy is excited to climb the oak tree in his new backyard.  About halfway up the tree, Timmy loses his grip and falls to the ground, resulting in a broken leg.  There will be costs for the ambulance, the emergency room, the orthopedic surgeon, the pediatrician, the radiologist, etc.

        Who is responsible for those costs?  Will the Seller's homeowner's insurance cover it?  The Buyer doesn't have insurance on Little Timmy.  Nor does the Buyer have homeowner's insurance in their name, since they have not taken title to the house (the deed is not yet in their name).  Who will be liable?

 

 

     4.   Buyer Finds Something Wrong with the House

          "We had the Home Inspector and read his report, but he didn't say anything about this kitchen appliance not working right.  The Seller needs to fix that, or else get us a new one."  The real estate agent reminds them that they did a Final Walk Through inspection.  The Buyer responds, "Well sure, but our contract says that the Seller warrants the appliances.  Since it is still their house, they need to fix it".

     5.   Liability for Personal Property

           An unexpected hurricane is forming in the Gulf of Mexico (e.g., Hurricane Michael, October 2018).  Two days later, it blows through town.  A tree falls on the garage, cracking the roof.  Eight inches of rain pour down on the Buyer's furniture and unpacked boxes that are in that garage, ruining most of it.  Who is financially liable, the Seller or the Buyer?

     6.   Buyer "Remodels" the House

          The Buyers plan to renovate the kitchen.  Why not get an early start?  "Let's go ahead and remove these counter tops, and take down these cabinets".  When/if the sale falls through, the Seller gets back a damaged house that will cost money to repair.

 

 

      7.   The Loan is Denied.  

      The Buyer goes shopping for a new car; they are just looking, but the Car Salesman makes them an incredible offer.  They purchase the car.  The Lender sees the new monthly car payment on their credit report.  The Lender calls the Buyer to inform them that, "The additional payment has exceeded your debt-to-income ratio.  You no longer qualify for the mortgage loan.  Sorry."

     8.  Wire Fraud

         The Buyer wires the the funds due at closing to a scammer in Eastern Europe who is posing as the Title Company.  The funds cannot be retrieved.  The Buyer has no more money.  They cannot buy the house.

 

____________________________

 

What Should You Do for Early Possession?

 

       See a Real Estate Attorney 

     The lawyer may draw up two separate documents:  (1) The Contract for Purchase and Sale, and (2) a Residential Lease.  The lawyer may advise the Seller to contact their insurance agent, to change their policy from owner-occupant to landlord-tenant.  The lawyer may advise the Buyer/Tenant to get renter's insurance.

      Speaking of Lawyers  

     As a Broker, the author of this article wants his own attorney to prepare a disclosure advising the Parties of the inherent risks in "Early Possession", and a disclosure that must be signed by the Parties that releases the Broker(s) from any liability resulting from Early Possession!

____________________________

 

 

Frederick Griffin, Licensed Florida Real Estate Broker    

 

Tallahassee Florida Metropolitan Area

Exclusive Representation for Buyers and Sellers 

 

 

 Realtor logo       HUD Logo Fair Housing

 

 

 

Frederick Griffin, Licensed Florida Real Estate Broker    

 

Disclaimer:  Nothing in the above blog article is to be construed as legal advice, tax advice, or financial advice.  For legal advice see an attorney.   For tax advice or financial advice see a tax attorney, certified public accountant, or other qualified professional.

 

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Rainer
502,413
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Great awareness!!!

"Early Possession" might result in serious legal and financial problems for both the Buyer and the Seller (and the real estate Brokers involved in the sale). The lawyer may draw up (1) The Contract for Purchase and Sale, and (2) a Residential Lease.  Seller change their policy from owner-occupant to landlord-tenant and the Buyer/Tenant to get renter's insurance.

Dec 20, 2018 03:54 AM #1
Rainmaker
4,432,083
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Sham, thank you 

Dec 20, 2018 05:02 AM #2
Rainmaker
4,796,551
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks for the re-blog, Gita.  Very good information from Fred about early occupancy. 

Dec 20, 2018 05:43 AM #3
Rainmaker
4,432,083
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Gabe, thank you 

Dec 20, 2018 05:48 AM #4
Rainmaker
5,271,087
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thank you very much, Gita, for sharing this excellent reblog selection.

Dec 20, 2018 07:12 AM #5
Ambassador
933,431
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

I can share some horror stories where the buyer moved in early!

Dec 20, 2018 07:45 AM #6
Rainmaker
4,432,083
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Roy, thank you 

Dec 20, 2018 06:08 PM #7
Rainmaker
4,432,083
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Mike, it is never a good idea.

Dec 20, 2018 06:09 PM #8
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Rainmaker
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Gita Bantwal

REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel
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