When buyers insist on moving into your home before they own it, the temptation to find a way to comply with the request or demand can be overwhelming.
My very best advice is to win the battle against that temptation without restraint.
That’s because the opportunities for problems to arise are manifold–for example:
- The buyers might cause damage;
- They might discover things they don’t like and:
- Demand remediation of the supposed defects;
- Take a casual approach to closing on time;
- Refuse to close altogether.
- Decline to leave if the transaction falls apart, even through no fault of their own–for instance, if their lender ultimately balks;
- Refuse while they remain to permit showings in the event that the seller seeks back-up offers.
None of these eventualities could be desirable or inexpensive for a seller. The only winners in such cases will be lawyers. Sellers can lose not only money but the chance to unload their property quickly at the right price.
So, don’t do it.
However, since some sellers inevitably will feel compelled to ignore this advice, here’s what to do if you must allow pre-settlement occupancy.
- Instead, rent them a hotel room and storage space (or, better yet, tell them in no uncertain terms that it’s the perfect solution, at their expense and explain why, no matter how much you like them and want to be liked);
- Failing No. 1, retain a lawyer to draft an ironclad license (not a lease, which gives them too many rights in many jurisdictions) for them to occupy the premises;
- Demand a security deposit equivalent to two or three months’ rent and document conditions with photos or videos;
- Require the buyers to purchase their own homeowners’ insurance;
- Institute severe and enforceable financial penalties for failing to move out on time.
And one more thing: Don’t do it!
Your risk of getting burned is incalculable.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022