Homebuying is filled with a lot of angst – for both buyers and sellers. Buyers may be worried about making sure the home passes inspection, the bank’s appraisal comes back high enough and their mortgage loan is approved.
Sellers often worry about how they’re going to pack up and get moved – and whether or not they can find a new place in time. This can be particularly true for sellers who are older or those who have disabilities, and who may be looking for housing that better suits their situation.
Because of this, sellers sometimes “hedge their bets” through a post-closing occupancy clause. In essence, this sets the stage for what will happen if a seller fails to vacate the property within the allotted time after closing (usually about a week).
Should you have a post-closing occupancy clause in your purchase agreement?
Buyers and sellers are free to negotiate anything they feel is fair. That being said, sellers may want this clause for obvious reasons. Without it, they run the risk of getting sued for violating the terms of the contract (or, evicted, if they really dig in their heels and refuse to budge).
Buyers may not be so keen on the idea, but if the real estate market is tight or they really want the home, they may be willing to agree to some well-defined limits. Generally, that might be something like a “per diem” charge for every day the seller goes past the expected move-out date, or it might even allow the seller to remain in the home for several months, so long as they pay what the buyer demands for their occupancy. (This essentially converts the seller into a temporary renter and the buyer into their landlord)
Whatever you decide to do, it’s important to make sure that you’re comfortable with the agreement (no matter which role you are in), and you need clear and open communication between all the parties involved. It’s important to note that roughly 20% of house sales end up with the seller needing a rent-back period before they get moved, so it’s not at all uncommon.
Closing on a home can be stressful, but it gets a lot easier when you have the right legal guidance.