Buyers and Sellers oftentimes must negotiate possession dates either prior to or after the closing date. Extreme care must be exercised by all parties so that respective interest are protected. Let’s first look at this subject from the viewpoint of the seller.
Sellers may want to negotiate a contract with a delayed possession of lets sat three days, to assure themselves that the Buyer was in fact able to close their loan. Some may have been “burned” in the past when they discovered the morning of the scheduled closing that an Underwriter had denied the loan resulting in the contract going “south”. The Seller may have incurred a large amount of expenses to move their household goods back into their recently vacated house, ect. It’s easy to understand that, that scenario could and does happen.
Potential issues for the Seller in a delayed possession start with ensuring adequate insurance for household belonging. At that point, the Seller is either a Paying or Nonpaying Renter who should have Rental Insurance after closing has occurred. Further, any such Temporary Occupancy Agreement should be in writing and clearly state such things as:
- Is a rental payment expected and if so, what amount?
- Will a damage deposit be held by the new Owner and if so, what amount?
- What happens if damage ensures after closing but before possession is given?
- If damage is caused by the negligence of the Seller (ie grease fire in kitchen) who is responsible for repair?
- What party is responsible for Utility costs, ect.?
I’ve seen examples from two insurance company representatives within the same company; one stating damage was covered under the new Homeowner Insurance Company’s policy and another who stated the claim would be denied.
From the Buyers perspective… The Buyer likely would have conducted a final walk through inspection prior to closing to ensure that the property was in the same condition it was in as of the Binding Agreement Data. However, what happens if someone vandalizes their house or damage occurs due to a hail storm, or the Seller trips and falls one day after closing and breaks their back? Once again, whose insurance will handle such a matter?
There is also a very distinct possibility that the Buyer would not have discovered a big hole under the couch during the “final” walk through. When the Buyer takes possession three days later their new “dream home” becomes something very less because of some unknown defects that are now discoverable. Problem is, closing means closing and remedies may be difficult in these scenarios.
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