In the heat of the moment providing keys to a buyer before final funding seems innocent enough. However it is a Pre Closing Occupancy by Buyer if the Buyer has access to a home before it is closed and funded. The same issues that can arise if a Buyer pre-occupies a home for a month can occur in just one day. If a purchaser wants access to a home before closing, even one day, it should be handled the same way any other Pre Closing Occupancy would be handled.
If a buyer is taking possession of the property before closing, be sure to have the Pre Closing Occupancy by Buyer Rider completed. The lease must state that the Paragraph 11 and Paragraph 12 no longer applicable and the Buyer accepts property in existing condition. A lease is the only thing that governs the occupancy by the buyer. Even if the Buyer is going to be in the home for 1 day prior to closing, a lease is still required. This lease should be prepared by an attorney so that these considerations are included and the seller is protected. CR-5 – Pre-Closing Occupancy by Buyer Rider T (Rev 09_15)
The Rider must be included and noted in the contract as such. It is not acceptable to write in any occupancy terms on the sales contract. In both Riders, there is an area where the cost of lease preparation is identified. Be sure to use the Property Management attorney lease for preparation and for cost information refer to this previous post: Rental Policies and documents required
Paperwork is the only way we can protect our clients and ourselves. Verbal agreements, and assumptions in these occupancy situations are far to precarious. Get it in writing and get it done by a professional to protect all of us.
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