Rightfully so, you appear to be reluctant to take on potential risks brought about by a Seller wanting to maintain possession after close of escrow. Allowing a Seller to occupy the property even for one day after the original possession date can create tenancy rights. Therefore, issues and topics common with rental property come into play.
If you still are considering this option, one that I advise my Buyer clients not choose, I would suggest you obtain a crystal clear agreement in writing regarding the following terms before moving forward:
1) The exact term of possession
2) Compensation to cover Buyerâ€™s costs
3) Late charges
4) Responsibility for utilities
5) Buyerâ€™s entry rights
6) Responsibility for maintenance
8) Responsibility for insurance
9) Any other special terms deemed necessary.
Make no mistake; not having such an agreement would be unwise. Consider it the cheapest insurance you will ever invest in.
Section two of CAR Form Purchase Agreement Addendum (PAA, Revised 4/11) was created to address the considerations above when Buyerâ€™s possession is delayed due to the need of the Seller to remain in the property past COE.
I would highly recommend you cover section two with your RealtorÂ® to decide whether its use might be appropriate in your situation; however, personally, my answer would also be a respectful "Sorry, we have already planned to move in as soon as escrow closes".
Also, make sure you take advantage of RPA Para 16 "Final Verification of Condition", which allows you to perform a final walk-thru within 5 days of close of escrow. I would do this closer to the COE date to confirm the Sellers are prepared to move.
Example: If the owners are to receive $100K in net proceeds from the sale, tell them they can rent back with $5,000 still be held in the escrow account until the completely move out in a neat & orderly fashion. If the current escrow account won't hold these funds, you can set up a new escrow acct. with a 3rd party to hold these funds. This way if the now previous owners don't want to move, you say, "well, have fun not getting your $5k back".
Shoot me an email directly if you'd like to talk to me some more. I don't look back on this same Trulia thread for answers posted after mine.
Realtor Since 1996
Main Street Realtors
They want you to assume all of the risk, why would you assume their problem? All owner occupied mortgages specifically address occupancy, if they do not get out in a timely manner you could be in default of the terms of your loan even making payments on time. Good luck,
NMLS # 6395
Financing Kentucky One Home at a Time
If, however, you are still at a point where they could cancel the deal, then I suggest, if you are willing and able to allow them to remain in the house, you have an attorney write up a specific "use and occupancy" agreement to make sure you're protected.
This will be very much like a lease with all stipulations spelled out in regard to what amount you will be paid, calculated either per diem or weekly as "'rent".......money should be held back from the seller following the closing to cover this rent and even an amount similar to security.....also to be decided is......who is responsible for what in the event something breaks........insurance coverage...and penalites built in if they don't vacate on the agreed upon date.
And.............By alll means, limit the amount of time they have to find a new home. Select a time frame you are comfortable with 30 - 45 days might be a consideration.