What Is a Post-Settlement Occupancy Agreement? Often, selling a home and moving into another one is a roller coaster of emotions. Most closings to not happen simultaneously. Anyone in the real estate world can tell you the demand for homes far exceeds the supply. Most buyers in the market want to occupy the new property directly after closing. Title companies and brokers do their best to accommodate sellers and buyers the best they can. Not everything goes according to plan in real estate. Imagine selling a home and and having to stay in a hotel for a month or more. This can become costly. This can not only be inconvenient, but also extremely stressful. Post occupancy agreements can be the solution to this problem.
In some real estate transactions, the seller will request an agreement with the buyer that they can remain in the home after closing, occupying the home and moving out at an agreed upon date after the transaction is complete. This post-settlement occupancy agreement between buyer and seller outlines the amount of time the sellers can remain in the home (generally under 60 days) and the occupancy charge. It normally involves paying the buyer rent for the period of time the seller stays in the property. A post occupancy agreement can also involve holding money in escrow until the property is vacant.
Why would a post-settlement occupancy agreement benefit the buyer and seller?
There are many reasons a seller might request a post-settlement occupancy agreement, including:
- The house sold more quickly than expected and they would like to avoid finding temporary housing
- The sellers are experience delays with the home they are renovating and moving into
- The deal for the home the sellers were planning to buy and move into fell through
In these and other scenarios, a seller might benefit from continuing to live in their home after selling it for a short period of time.
Buyers might also benefit from a post-settlement occupancy agreement, in situations where they do not need to or want to move in immediately. If your seller is willing to cover the rent for a month or two, this may allow you the time to prepare for a move, get renovation plans in order, or sell your current home without paying two mortgages simultaneously.
What is the difference between a post-settlement occupancy agreement and a lease?
While in effect a post-settlement occupancy agreement looks a lot like renting a home, the relationship between buyer and seller in this scenario is very different from landlord and tenant.
A seller is responsible to hand the home over in the condition it was in at closing, unlike a renter who may lose their deposit but is not ultimately responsible for the home. A security deposit from the seller will be held by a third party without interest, only released if the seller meets the conditions listed in the agreement.
The buyer is allowed to enter the property during the post-settlement occupancy period, with an expectation that they will be respectful of the sellers during this time by only making “reasonable requests.” For example, entering the home to measure or allow contractors to get quotes for a renovation during business hours would be considered a reasonable request, while asking to enter the home late at night to show it to friends would not.
Today, Post occupancy agreement are becoming more common place in todays market. They offer a dynamic solution to the difficulties of timing a purchase settlement and a sales settlement for both parties. When it comes down to the transaction, buyers and sellers want it to go as smoothly as possible. With this aggressive market, time is the most important factor. Make sure to plan out the transition from one home to another carefully. Again, most transactions in this market are dependent upon another transaction happening. So if you are considering selling you house but need specific accommodations, consider Homeinc!
Have you considered utilizing a post occupancy? Have questions regarding a post occupancy? Give us a call! The team members at Homeinc are standing by waiting to help you put a plan in place. You can call us at 1-888-850-2636. Or, reach out to us on our website here. We are ready to help.