Early occupancy is exactly what it sounds like—an agreement between a home buyer and seller to let the buyer move in before closing. But as a seller, should you allow the buyers to move in early?
While it might seem like a kind thing to do, letting the buyer move in before closing is not advisable in most circumstances. Even if you’ve already moved out of the home you are selling or are selling an empty secondary property, there are risks to early occupancy that should be considered first.
Risk #1: Trying Before Buying
While you’d hope this wouldn’t be the case, granting buyers permission to move in early allows them the opportunity to find problems that were too minor to turn up during the home inspection or walkthroughs, which they might then try to demand you fix before closing.
In a worst case scenario, there’s also the possibility that the buyer might decide they don’t like the house after living there for a few days/weeks and completely cancel the contract, even if it means giving up their earnest money deposit and facing any penalties from contingencies within the contract.
Risk #2: Liability
While you’d hope that people would have a care, early occupants can potentially damage your property. And if the sale falls through for any reason, you’re the one who would be stuck having to deal with the repairs once they leave, since your homeowner’s insurance is a policy that is meant to cover you, the homeowner, not any other party.
On the flip side, the buyers might try to make improvements to the house themselves while living there, only for the sale to fall through, and those ‘improvements’ could turn into a lien that you would then have to deal with.
Additionally, if someone gets hurt on your property while you’re still technically the owner, you could potentially be held responsible. And as mentioned, your homeowner’s insurance isn’t likely to help you out of that spot.
Risk #3: Squatting
There’s also the possibility of early occupants refusing to leave if the sale falls through, forcing you to take legal action to evict them the same way a landlord would with unpaying tenants. And the eviction process can take months, which spells trouble if you’re still trying to sell the property, and puts you at risk for any number of liabilities.
Still Willing To Take The Risk?
If you still choose to allow buyers to move in early despite the risks, you can potentially take measures to protect yourself with early possession agreements and liability waivers, as well as requiring a deposit of some sort. Talk to your real estate attorney about your options to ensure that you’re protected if you decide to allow early occupancy.
At Title Junction, we care about helping you stay informed throughout your real estate transaction. The experts at our title company have extensive knowledge about real estate not only in Cape Coral and Fort Myers, but all of Florida as well.
Have questions? Give us a call at 239.415.6574.
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