Sat 31 Jan 2009
Purchase Contracts: The Dangers of Possession After Closing
Done at last! The papers have all been signed, and you’re ready to move in. At least that’s the way it’s supposed to work. In some cases, though, a seller could ask to keep possession of the real estate for a period of time after closing. The path of least resistance might be just to approve the request. Before making that choice, here are some things to keep in mind.
The last days of frantic activity just prior to contract closing can be a little disorienting. With all that’s going on, it might seem like a small thing if the seller asks the buyer for time in which to vacate the home, or to take care of other issues on the move. Although the request may seem perfectly reasonable, a buyer should consider it with extreme caution. If you choose to allow the seller to stay after closing, they must be required to pay rent for the extra time, and that part of the transaction must be thoroughly documented.
There must be a definite limit placed on the time the seller can stay in the property, and it must be in written form. A clear agreement or contract addendum between the seller and buyer outlining the details of the post-closing possession can be provided by the real estate attorney.
The seller may approach the situation by putting you under pressure of the agreed deadline. If the seller announces at closing or right before that he or she needs to stay longer, it is usually advisable to delay closing until such time as the seller can move out or a proper agreement has been drafted and agreed upon.
As a buyer, once you close the deal, the property belongs to you and is your responsibility. If your tenant accidentally causes a fire on the property, you are responsible and you stand accountable for the loss because of your status as owner of the property. The seller will not have to pay for the loss unless it is included in the agreement.
Additionally, sellers who keep possession after closing are less motivated to take good care of the property. When the deal closes, your acceptance is tied to the condition in which it was at that time.
Whatever occurs to the property after the contract closing is the burden of the buyer, without regard to who is actually on the premises. So if a carpet gets soaked or a furniture mover scars a wall or floor, you are the person that will end up paying out of pocket for the repair work.
A common problem with having the seller hold possession past closing is that items that should remain with the home can mysteriously disappear between closing and final possession of the property. Even in this extreme case, the buyer is responsible for the missing items.
As buyer, you take on a responsibility that goes with your investment in the property. It is in your best interest to insist on possession at closing, or to put off closing until the seller has entirely cleared out and can turn over the keys.
This article was presented by the ultimate Boulder real estate specialists of Colorado, Automated Homefinder.