There are many reasons why using a post closing occupancy agreement is helpful. If you’re hoping to sell your home now but you know you won’t be able to move right away then you will want to understand the details of moving later after closing using this special type of agreement. Let’s discuss the 7 simple steps to help you see if this is right for you.
What is a Post Closing Occupancy Agreement?
A post closing occupancy agreement is simply a legally binding document that both the seller and the buyer sign before closing on your home. This document allows you, the seller, to remain on your property for a set amount of time after closing.
Why Would I Want/Need to Sell Now & Move Later?
This type of agreement is useful in many situations including if you need to first sell your home to free up funds in order to complete a purchase on your new home.
You could write up a post closing occupancy agreement that will allow you to remain in your home while you close on the new home you will be purchasing.
Another situation could be if the home you’ll be moving into requires repairs and updates. A post closing occupancy agreement could help you live in your property after closing while you prepare your new home for you to move in.
Buyers can be leery of a post closing occupancy agreement — there is a lot of trust on the line when they let you stay in your home after they have already purchased it. If the market is a sellers market, then buyers may feel pressured to accept the terms of a post closing occupancy agreement in order to get your home under contract. If the market is a buyers market then your leverage in getting a potential buyer to agree to post closing occupancy is not as high.
Terms of Moving Post Closing
The terms of a moving later post closing can be negotiated and written up by a legal professional, or created on your own. The document becomes legally binding when both parties sign it so you want to make sure to include all the important information below:
- The agreement should be written and signed at closing and delineates the time limit for the seller to stay in the property and what the repercussions are for failing to vacate the property by the deadline.
- The occupancy agreement should require for the seller or buyers attorney to hold money in escrow. This money can be looked at like a security deposit you would put down when renting a home. The amount can be contingent on the length of time the seller will remain on the property. This money would cover any damages caused during the occupancy period and any expenses involved if a lawyer has to be retained to evict the seller if they refuse to vacate the property.
- Buyers often require the seller to pay an occupancy fee. This fee could cover the buyers carrying costs that are incurred during the occupancy including the interest on the mortgage, real estate taxes and maintenance. The utilities are often kept in the sellers name so they can easily pay the utilities while they remain in the property.
- The agreement should include a monetary penalty that the seller would pay if they fail to vacate the premises by the deadline. This amount could accrue for each day the seller remains in possession though the exact amount is worked out in the agreement by both the buyer and seller.
- The post closing occupancy agreement should indicate that the seller maintain their homeowner insurance for the length of time they will stay on property (reach out to your homeowners insurance to see about coverage as you will no longer be the homeowner).
- The agreement should show that the property must remain in the same condition as at closing. The buyer will inspect the property when the seller vacates it to make sure they are no issues. If problems (broken appliances or damages, etc) are found then money held in escrow should be paid out in the amount due for repairs.
- One way buyers protect themselves with a post closing occupancy agreement is in the wording: It should be stated in the agreement that the seller is entering into a license agreement, not a lease agreement. If the buyer has to take the seller to court then the difference in wording will make a difference — a lease agreement would send them to Landlord Tenant court which could slow down the process and not always work in the buyers favor.
Most of the potential problems and concerns with a post closing occupancy agreement lie in the risk the buyer is taking on with the agreement. Even with a legal document to protect their asset, a buyer could still feel leery of signing this type of agreement because of the lack of trust between a buyer and a seller (who are essentially strangers) and the unwillingness to take on the risk. As a seller you could potentially have a hard time finding a buyer willing to agree to giving you extra time in your home which could pose a problem for you in your unique moving situation.
If your situation requires staying in your home past closing let’s talk. It isn’t your only option of course, but it could be very helpful if you need the flexibility. Whether you’re building a house, moving to another state, finding a new house to buy, relocating for job reasons or anything else GaryBuysHouses is here for you. We are your local, trusted house investor in Utah. We’re ready to make a cash offer on your home today AND allow you to stay in your house up to 60 days after the sale of your house with NO cost to you whatsoever. You can have the time you need to find and close on your new home without all the legalese and stress.
Gary also offers flexible options that can be tailored to your situation such as the opportunity to rent back your home after closing for up to a year at below market rent or a lease back with a term for up to three years. You can sell your house today and have time on your side for moving and freeing up cash with Gary’s Sell Now, Move Later program. Contact Gary to learn more about it today.
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