Should I Stay or Should I Go?
Once a property goes into contract of sale, the seller must start to think about vacating the premises. Typically, the buyers have a right to expect that their new home is vacant and “broom clean” at the time of the closing so that they can move in right away. But what happens if the sellers are not ready to move out of their home on the date of sale? There are times when the owners cannot leave prior to the sale of the property and they must decide, as the 1982 song by the Clash goes, “should I stay or should I go.”
In my experience, I have come across some extenuating circumstances where the seller needs to stay in the home after the closing. There are cases where the sellers are building a new home and it is not ready yet, or maybe the family’s children need to finish the school semester in their district, or perhaps an elderly couple might be moving into a senior housing apartment and the lease doesn’t start for a few months,. In these instances, the sellers may be forced to stay in the house for a short while longer. If the potential purchaser is amicable to this type of situation, a post-occupancy agreement may be entered into by the parties. This agreement should be handled early, and be referenced in the contract of sale.
Since the seller is using the house which the purchaser now owns, the sellers should be held responsible for utilities, property taxes, interest on the buyer’s mortgage, and other household expenses such as repairs during the post-occupancy. The sellers should keep their insurance policy in place and the buyers should also get their own policy to cover the house just in case the seller accidentally burns down the buyers’ new dream home or someone gets hurt on the premises.
It is also recommended that the sellers put a substantial amount of money in escrow to ensure that they actually move out of the house at the end of the post-occupancy, and leave it in good condition. This type of transaction can be quite an inconvenience for the purchasers, since they don’t actually get to occupy and enjoy their new home after closing.
Many times, the buyers will insist on having a key to the house even though they are not taking occupancy. Of course, the buyers should not be given free rein to come and go as they please, since the seller is still living there. The sellers would not want to come home and discover the buyer taking a bubble bath or helping himself to food in their refrigerator. The best bet is to give the buyer a key to the bottom lock as a symbolic gesture with the sellers retaining the keys to the dead bolt to insure their privacy and security during occupancy.
These types of post-occupancy agreements are typically short term, lasting two to three months at best. Both the purchasers and their attorney should seriously consider whether they will enter into a post-occupancy agreement, since they can be quite risky.
In worst case scenarios, a seller could destroy the buyer’s new home, refuse to move out, and use the court system to stay indefinitely while the buyer is making mortgage payments without having use of the house. However, if the buyer is totally enamored with the house and the seller will only enter into the transaction with a post-occupancy, then the buyer may want to take the risk. In that case, it is advised that the purchaser retain an attorney who is well versed in Real Estate Law and familiar with post-occupancy agreements in order to protect his interests.
The agreement must be well drafted in order to encompass the terms of the occupancy such as taxes, rent, insurance, utilities, maintenance, inspections, security, and the final move out procedure. If handled correctly, a post-occupancy agreement will provide both the purchaser and the seller with the perfect solution to avoid a conflict rather than simply leaving things to chance. Thus, one must make sure that an agreement is reached early on to prevent any surprises. “So you got to let me know…should I stay or should I go?”