What are the Ramifications of a Post Closing Occupancy Agreement?

By
Real Estate Broker/Owner with House to Home, Inc. - Denver Real Estate - 720-231-6373 DRE# ER40011786

 

You found the perfect home, and you need possession right after closing.   BUT, the Seller has not found a home and asking for a rentback for a month.  What do you do?   Is this the right situation for you?

 

First, the Post Closing Occupancy Agreement spells out to the both the buyer and seller, how long the Seller can remain in the property, who pays for the electric and gas, and water.   Also, this document has an area to require the Seller to keep insurance on the property after closing.  (After closing, there is no homeowner's insurance, so they will need renter's or contents policy.)   Buyer also has the right to ask for a daily rental fee (usually the amount of their daily mortgage, but if competing with other buyers, sometimes this is waived just to get their bid accepted.)

 

I have created this document for buyers, but have to have a conversation to be sure they understand the ramifications it could have.

 

A Buyer will do their walk-through before closing, and get a key at closing, but won't be able to take possession until the agreed-upon date.    Will the Seller leave the property in good condition?   TYPICALLY, if a home is in good condition, and well-maintained, the Sellers usually do.   If there is any question about how to leave the property, spell it out in this document.   The Buyer also has a right to retain a deposit and return after they are able to take possession.  

 

If at all possible, I always recommend to both buyers and sellers to give possession day of closing.   Sometimes this is a tough call with Sellers who have not closed in years, and was used to having a few days after closing to get the move completed.   We were one of only a handful of States that allowed the Seller to stay in a property after closing.

 

Lots to think and talk about when contemplating a "Rentback" when you thought you would take possession at closing and start the new chapter of your life.

 

Comments (14)

Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs

Lots of great details for buyers. Hope it works so well for you. 

Dec 04, 2021 07:34 AM
Brenda J. Andrew
ULTIMA REAL ESTATE - Corpus Christi, TX
Professional Realtor in Corpus Christi, TX

Good morning Joan Cox This is such great information and has been very needed this past year.  Lots of sellers have been doing this and the buyers have to oblige in order to get their offers accepted.  This is something I should have been using.  It only happened a few times for me, but I just closed one yesterday and the seller wanted funds in her account prior to moving.  I went to do the walk through for the buyers, and she was still working in the property - like literally working from a desk and home office.  She still needed to move clothing and had cleaners coming.  She wasn't planning on being out until after the cleaners left.  I thought it was strange.  I am going by this morning to make sure she is gone!

Dec 04, 2021 07:50 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Thanks Eric.

Dec 04, 2021 08:06 AM
Jeffrey DiMuria 321.223.6253 Waves Realty
Waves Realty - Melbourne, FL
Florida Space Coast Homes

In today's market I am often forced into this type of agreement.  I do not love it, but it is a sign of the times.

Dec 04, 2021 08:07 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Brenda, if a seller does not vacate the home by the date on the contract, there is amount that was agreed upon, and they will need to pay.  OH MY, hope they left.

Dec 04, 2021 08:07 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Jeff, I don't enjoy them either, there is too much uncertainty with the Seller.  But, if a buyer wants their contract accepted, not much choice often times.

Dec 04, 2021 08:09 AM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Joan - it's a market reality some face at times.  It's definitely not ideal but it does exist.  

Dec 04, 2021 08:40 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Michael Jacobs it is definitely a risk, but if a buyer wants the home, they may have to take the risk.

Dec 04, 2021 08:52 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Home buyers need to understand the risks involved with post settlement occupancy agreements. The sellers become tenants and eviction proceedings can be expensive and take a lot of time.

Dec 04, 2021 08:58 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Roy Kelley there was a lot of conversation when you couldn't evict if the tenants were not paying due to COVID, so what if a seller didn't move out at the end of the rentback, and it went past the 60 days, and went into a non-owner occupied loan?   LOTS of risk! 

Dec 04, 2021 08:59 AM
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Joan- I'm not an agent but for me, there are to many risks that could pop up!!! 

Dec 04, 2021 03:55 PM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Hi Joan... I've rarely done these, but when I have been involved in a post closing possession by seller they went well.

Dec 05, 2021 05:28 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Kathy, there are, but if a buyer wants a home, sometimes there is no getting around it.

Dec 05, 2021 07:44 AM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Nina, you are lucky.   We are seeing probably 85% of the sellers asking for a post closing.

Dec 05, 2021 07:45 AM