No matter how much effort we put into organizing the transition between one home to another, sometimes the dates just don’t work out in our favor. Maybe you are building a new construction home in Locust Grove and it’s been delayed by weather. Perhaps you are moving out of state and the sellers of your new home can’t close on your preferred date. When you aren’t able to move directly from one home to another, a post occupancy agreement can help ease this transition.
What is a post occupancy agreement?
A post occupancy agreement, also known as a post-settlement occupancy agreement, is a contract between the sellers and buyers of a property that permits the sellers to live in the property after it has been sold to the buyers for a designated amount of time.
For example, let’s say the closing date on a home is September 3rd. However, the sellers cannot move into their new home in Locust Grove until September 16th. Rather than placing their belongings in storage and renting a hotel room for two weeks, the sellers can ask the buyers for a post occupancy agreement.
Do sellers pay for a post occupancy agreement?
While sellers don’t pay to have the post occupancy agreement contract negotiated or signed, sellers will pay a determined rent for the time they remain in the home. The cost of renting the home will be determined by the buyers.
Since the sellers are renting the home, post occupancy agreements are also known as “rent-backs.”
What happens if the property is damaged during the post occupancy agreement?
Before a buyer closes on a home, a final walk through is done to make sure that the home is in similar condition to when the home inspection was completed. A buyer’s REALTOR® will confirm that any agreed upon repairs have been completed.
Likewise, the sellers are responsible for delivering the home to the buyers after the post occupancy agreement ends in the same condition that it was during the final walk through. If a seller damages a wall while moving out a box, stains a carpet, or does other damage, the seller is responsible for repairing the damages that occurred during the rent back.
The most important part of agreeing to a post occupancy agreement is being comfortable with the contract. As a seller, or buyer, it is crucial for you to carefully read the contract and have a clear move-out date written in the agreement.
Typically, an agreed upon security deposit will be given by the seller to a third party (like the title company) to be held until the post occupancy agreement comes to an end. If the buyer does not see any damages to the property, then the deposit will be returned to the seller.
Why would a buyer agree to a post occupancy agreement?
Rent backs take some stress away from the seller. When they are needed, having a buyer who is agreeable can give one buyer a competitive edge over another in the eyes of a seller. Sometimes, post occupancy agreements can work for a buyer too if they are not quite at the end of a lease and the agreed upon rent can help cover the cost of a mortgage and rental payment.
When do I need to decide?
As a seller, the soon you determine the need for a post occupancy agreement the better. Your REALTOR® will need to be aware of your need and share this information with other agents and their clients.
