With the current market conditions, Post-Possession has been a HUGE topic of discussion lately. While it used to be more commonplace for a seller to retain possession of the home for a couple days after closing to move out, over the last 20-years, it became the usual for that day of closing to act as the possession transfer date.
Now, with homes selling so quickly and the buying side proving more difficult, some sellers are needing a cushion to ensure they don’t wind up homeless. Buyers are complying, just to get their offer accepted, but there are risks involved.
This means the buyer is purchasing a home, but is not able to move in for a specified timeframe, after the seller moves out.
It’s long been good practice for us as real estate professionals to shy away from pre and post possession, due to the potential for liability. When clients really want to go down that road, they may want to seek legal advice and definitely counsel with their insurance agent for pitfalls.
Here are some aspects to consider:
- Insurance – who is responsible for what.
- Payment – is the Buyer going to expect the Seller to pay for the extra time?
- Deposit(s) – will one be required?
- Pets – if the seller has pets, do you need to worry about insurance that covers them and their actions?
- Repairs – who is responsible for what and at what price threshold?
- Length of Time – financed transactions can limit the amount of post possession allowable before mortgage fraud comes into play.
- Move Out Date – what happens if this date comes and nobody moves out?
As you can imagine, it can be a sticky situation. I am seeing many instances where there is no deposit requirement and no rent being collected. That means added cost for the buyer, whom is still responsible for the mortgage payment during that time.
Before you enter into one of these agreements, make sure to consult with proper legal and insurance advice. Sometimes it can make sense for all parties and sometimes not.