What should you do if your homebuyer asks to move in before closing? In most cases, avoid the situation. The potential for problems is enormous, even if you have a prepossession agreement.
For example, if the house or its contents are damaged, there could be a legal battle to determine who pays. And what if someone is injured on the property? You also could face a lengthy eviction process if the mortgage falls through.
The only time to consider an early move-in is if there is no other solution and the sale depends on it. If you decide to take this bumpy road, be sure you have a prepossession agreement. Here are some of the issues the agreement should cover:
The buyer must have a mortgage commitment. There’s no deal without one.
Limit the early live-in time.
Add a prepossession agreement rider to the sales contract that details seller and buyer responsibilities.
The buyer must have their own fire, accident, and possibly flood insurance during the early possession.
Spell out who is responsible for problems such as appliance breakdowns, pipes breaking, or a leaky roof.
The agreement should detail what happens if there is no closing, when the buyer is to leave, plus a monetary penalty for each day the buyer stays past the deadline.
Establish that this is not a landlord/tenant relationship in any way.
No subleasing arrangements by the buyer should be allowed before closing.
The buyer must comply with all zoning laws and other ordinances.
It must clearly state that your responsibility and liability ends when the buyer moves in.
You should also consider retaining an experienced real estate attorney to help you write the agreement.
