I'm closing on my new home tomorrow but I don't get the keys...wait, what?5/3/2019
An agent came to me recently for help in explaining possession to their buyer client. When their buyer made an offer, the seller asked for possession of the property for 7 days after closing. The buyer accepted and moved toward closing. Now that the buyer is ready to close, he is starting to question the possession issue. Here were some of his questions:
- Why doesn't the seller have to pay rent while they continue to live there?
- How do I know the seller will leave the home in good condition?
- What is my recourse if the seller damages the property? Is there some type of a deposit in place to cover damages?
These are all very good questions. To answer them, let’s start with a little history:
First, it is important to know that once a buyer closes on a home, they are paying their mortgage payment, taxes and insurance on the property even though they may not yet be living there. As recently as 20 years ago, it was pretty normal in our area for sellers to maintain possession for 30 days after closing. However, with the recession came many vacant and bank-owned sales where the buyer received immediate possession. That market "killed" normal on many fronts including average possession time. While there is no hard and fast rule, a buyer typically receives immediate possession on vacant homes, but in transactions where the seller is still in the home, it is "customary" to give them 7 to 10 days to get out without charging rent. Any amount over 10 days usually includes the seller paying rent to reimburse the buyer for the costs they are incurring.
Now that we've covered possession and rent, let's move on to liability and damages:
Most purchase contracts state that the seller will leave the house in broom-clean condition, remove all personal property and debris, and make any repairs/replacements necessary from any damage or neglect. When the seller accepts the offer, they are contractually bound by it. However, buyers must understand that the only real way to enforce a contract is in court. If either party to a contract (buyer or seller) breaches the agreement, the other party must file suit and win a judgement to enforce the contract. Even if a deposit is held to cover seller damages, if the seller does not agree with the buyer as to the release of the deposit, they would most likely have to go to court to settle the matter.
In the end, there are a lot of promises made in a purchase agreement and both parties are bound contractually to keep those promises. It is important that you ask a lot of questions and work with your agent at every step to do your best to protect yourself against possible outcomes but there also has to be some level of trust that the other party will perform per the agreed terms.