Should A Seller Let The Buyers Move In Before Closing?
Buying, selling, and moving are usually stressful. There are so many details to work out, dates to negotiate, and moving pieces to track. On occasion, a property may change hands before the Buyer takes possession and moves in. A Seller may insist on staying in the property beyond the closing date. Perhaps the Sellers are purchasing a new home and need to close on their current property before they can close on the purchase. Or, the Seller may need to remain at the property post-closing for other reasons. When the Seller stays in possession after the closing date, this is known as post-closing possession and the parties enter into a Possession Agreement, that is usually attached to the Contract of Sale and executed at the closing. This Possession Agreement outlines the financial, insurance, liability, timing, and other conditions of the Seller’s post-closing possession. A post-closing Possession Agreement where the Seller remains in possession after the closing is more common than a pre-closing Possession Agreement where the Buyer takes possession of the property before the closing date.
On the other hand, a Seller may be sitting on an empty property with a Buyer who is under pressure to relocate as soon as possible. The Buyer asks if it is possible to move into the house before the date of close. This is referred to as pre-closing possession. However innocent it may seem; it exposes the Seller to a host of legal issues and risks. Even if it is just for a few short days, it is possible for the Buyers to damage the property prior to the close. If the soon-to-be-owners accidentally drive a car through the garage door, or flood the master bath, or start a fire in the kitchen, who will be held responsible? What if the Buyers decide to walk away from the deal after they have moved in? Worse yet, what if one of them gets injured, and tries to hold the Seller liable? Or they refuse to pay agreed upon pre-closing expenses or refuse to sign closing papers, or continue to squat on the land? As a Seller, the idea of a long and painful legal process in attempting to remove would-be Buyers from the property is a nightmare.
Also, as we all know, when you move into a house or apartment is when you start to realize all the imperfections or issues associated with the property. If a Buyer moves in pre-closing, they may find problems and complain. Or worse, they may try to get out of the deal or demand a decrease in the purchase price and then you are in a tough situation.
Yes, Real Estate Attorneys can draft Pre-closing Possession Agreements that will help a Seller minimize risk and protect their interests. However, as illustrated above, even the best Possession Agreement cannot anticipate every scenario that could arise should a Purchaser move in before closing and from a legal perspective, it is not a good idea. In this situation, it is much better to be safe than sorry and have the property change hands at the time of the closing.
For more information on Letting Buyers Move In Prior To Closing, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (800) 619-3570 today.
CALL NOW FOR A CONSULTATION
Toll Free: (800) 619-3570
New York City: (212) 786-7950
Westchester County: (914) 719-6970