Post-Closing Possession: Everything You Need to Know
Sep 01, 2022 brooklyn,Brooklyn Buyers,brooklyn real estate,brooklyn realty,brooklyn sellers,Buying in Brooklyn,real estate,selling in brooklyn
So, the seller wants to stay in their home after closing. It happens. Sellers want to take advantage of the market, the season, etc., and list their house before they’re actually able to move out. And with that comes a post-closing possession agreement.
The post-closing possession agreement has gone out of style in recent years due to the updated 2019 Tenant Protection Laws, so be sure to discuss the possibility with your lawyer. But let’s give you a quick rundown about what this means, as well as the risks that are involved on the buyers’ and sellers’ sides.
What is a Post-Closing Possession Agreement?
This agreement is often called a rent-back, where the seller of the home you purchased can stay there, paying you rent, for a decided-upon amount of time. It’s commonly asked for when sellers need to reduce their monthly debt before purchasing another home — especially if they aren’t able to line both transactions up at similar times.
There are penalties if the seller doesn’t move out by the agreed-upon date, but that doesn’t mean this setup comes without risks.
Risks for the Buyer:
- The seller may not leave on time (be sure to charge high fees for each day they stay past their move-out date).
- The seller may leave personal items (consider putting extra funds into escrow to cover this).
- You may be charged a sublet fee (check with your co-op to be sure).
- The home could be damaged before you move in (put it in writing that they are responsible for maintenance and repairs while they are there).
Risks for the Seller:
- If you cannot move out on time, you could be charged somewhere around $1000 per day past the agreed-upon date.
- It’s a license, not a lease, so there are no protections against eviction.
- You’ll still be responsible for home maintenance and repairs, including large, unexpected expenses that pop up.
All in all, it can be beneficial to offer sellers to stay in their homes if needed, especially in multiple-offer situations. But it’s important to understand the risks, as well as have an excellent contract written to protect you in all circumstances.
If you’re thinking of offering this type of agreement, talk to your attorney for guidance. They’ll be able to help you decide if it’s worth the time and trouble, as well as keep you protected every step of the way.