Ken, Home Buyer in San Francisco, CA

When does a final walkthrough generally take place in the home buying process?

Asked by Ken, San Francisco, CA Mon Mar 22, 2010

The short sale I'm looking to buy has been approved. The seller was IN the home when I first looked around & also at the time of home inspection, which has made the experience quite awkward because they have been extremely hostile to both myself and others. If my final walkthrough is several days before closing, is the seller legally required to be out of the property? Can I refuse to sign closing docs if the seller does not move out (including their personal property) by the time of closing?

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Answers

21
Hi Ken,

Congratulations! Hopefully, by this time, you're in your new home and happy with it.

Unfortunately, Realtors are not Attorneys and can not provide advise as to the law. However, with clients I represent who purchase Short Sales, I find it best to word the contract to include that the Seller must vacate by the walk-through. In the event, they do not, you provide a Notice to Perform to the Listing Agent and Sellers. If they do not perform on the contract (including the terms to vacate by the walk-through), you may be able cancel the contract in most cases. If the other parties know you have the potential to cancel the contract, it might light a fire underneath them.


Its all about how you word the purchase agreement and more importantly how familiar your agent is with Short Sales.

Christopher Pohlman
1.888.669.8881
415.894.2469c
christopher@YourNewRealtor.com
0 votes Thank Flag Link Wed Jun 23, 2010
Hi Ken,

Sounds like a challenging situation. The time frame within the purchase agreement with regards to taking possession of the property is when the seller must vacate the property. Example, 3 days after close of escrow. The exact terms should have been spelled out in the contract. If the seller has not vacated the home by that point then they will be in breach of contract. You also have the right to a final walk through or verification of the property. This typically occurs within 5 days prior to close of escrow, unless otherwise agreed to in writing. If the seller is not allowing you to complete your final verification then they are in breach of contract. If the seller does not follow through with the agreed upon contract, then I recommend that your Realtor send a Notice to Seller to Perform. This will show a trail in writing that you and your Realtor have followed the process and have done everything to that point that you can to force the Seller to perform their duties as per the contract. Your Realtor & Broker will help you determine the time frame at which you wish to give the seller to perform their duties as per the contract.

With regards to consulting an Attorney. Unless your Realtor and Broker are licensed Attorneys they will be unable to give you legal advice. So your question pertaining to can you walk away from the deal & your question regarding the signing of loan documents. If you refuse to sign the documents, you may be in breach of contract, therefore only an Attorney can advise you on this matter. I suggest that you do infact speak with an Attorney who specializes in Real Estate Law right away so that you can act accordinally and in a timely matter. I wish you luck!

Matt
0 votes Thank Flag Link Mon Apr 26, 2010
Update 4/26/10:

Thanks again for all of you who chimed in. I hope you can do the same again! Here are the main points. Any advice you can give me would be greatly appreciated. THIS IS A SHORT SALE.

- I am scheduled to close escrow on 4/30/10. I have an appointment to sign closing docs tomorrow, 4/27/10 and was supposed to do my final walkthrough right before signing.
- I just found out that seller missed their signing appointment last week. Seller has not begun moving out their belongings.
- Seller previously tried to arrange a lease-back, which I declined. Seller was hoping to move out around June or July.
- His agent advised MY agent to have me seek legal advice and threaten legal action.

My questions:
- Since seller has not started moving out belongings and possibly refusing to let me do a final walkthrough, in addition to missing their signing appointment, do I have an ability to walk away from this purchase? Are they breaching their contract?
- If seller is refusing to cooperate, do they have to supply something in writing stating this so I can cover myself?
- Would a 24 hour notice to perform help me get this process started?
- Should I STILL be signing closing docs due to this? I feel like seller is possibly trying to extend closing date. I've known since Feb that bank approved the sale.
- What other advice do you have? I don't see a point in hiring an attorney to pursue this, since seller is leaving the country. My agent is advising me to be patient and agree to a possible extension of closing, but I'm not interested in waiting several more months or go through the trouble of evicting the seller.
0 votes Thank Flag Link Mon Apr 26, 2010
Hi Ken

My suggestion is that you get clarification from your agent. Now we're getting into a situation where it could be considered that we're interfering in your contract.

I understand you're concerned but I'm sure it'll work out. I've been selling for ten years and have never had anyone not move out when they're supposed to.
0 votes Thank Flag Link Tue Mar 23, 2010
The final walk thru should be done just after the seller has moved out but enough time to negotiate any walk thru problems with the lender/seller but don't hold your breath. The seller will generally not care and the lender won't budge on any of the problems you face.
0 votes Thank Flag Link Tue Mar 23, 2010
Thanks to all who have answered so far. Here's a follow-up question!

To clarify, my contract states under "Section 3: Closing and Occupancy; c: Tenant-occupied property: Property shall be vacant for at least 5 days prior to Close of Escrow...Note to Seller: If you are unable to delivery Property vacant...you may be in breach of this Agreement." (Does tenant only apply to person or persons Seller RENTS to? Or does Seller have to vacate 5 days prior as well?)

Worse case scenario - if seller and their tenant (they rent out a room) are still occupying the property 5 days before closing, what is my recourse? Can his agent/seller's bank force him to leave? Do they have a responsibility to ensure that seller leaves? Am I still required to sign closing docs knowing these individuals haven't moved out yet?

Thanks in advance!
0 votes Thank Flag Link Tue Mar 23, 2010
Ken
I would do it the inspection right before signing. If they have not even started moving out then you may realize there is an issue. It is very difficult to move everything in 1 day and if they are not already out or all the signs of everything packed and they have started moving.... that may be an indictation you may have some issues on your hands. I will tell you most short sales the sellers do move when indicated.

Good Luck!!!
Web Reference: http://www.di4homes.com
0 votes Thank Flag Link Tue Mar 23, 2010
The seller and his possessions should be out of the home prior to final walk through. Generally it occurs just before closing, but if the seller is out and you can do it several days prior, all the better.

Yes, you should expect that everything is out except what will convey with the property.

Good luck,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Tue Mar 23, 2010
Ken -

The walk through time period is indicated in the contract. In the CAR contract, the time period is typically 5 days before close of escrow. (pg 5 item 15)

The possession date is also included in the purchase contract. In the CAR contract, bottom of page 1 - Item 3 - states: "Occupancy shall be delivered to Buyer at _____ am/pm on the date of Close of Escrow; or on ____, or no later than ______ days after close of escrow."

You can not close without signing docs and the seller is not obligated to vacate until whatever date you wrote in your contract. If you are concerned that the seller will not move out, consult with a real estate attorney to understand your options around eviction.

Good luck.
CJ
Web Reference: http://www.TalkToCJ.com
0 votes Thank Flag Link Mon Mar 22, 2010
Hello Ken,

Dan brought up some good concerns. Thou, ownership does not take place upon the signing of loan documents. The underwriter will still need to verify all loan documents after signing. And the loan still has not even been funded at this point. Once the deed records then title has transfered to the property. A potential course of action after signing loan docs. and discovering new damage during the final walk through is to inform the Lender and ask that the loan not be funded until the repairs are taken care of. And instruct escrow not to close escrow until the repairs are taken care of. That means the seller will not get their money. Be sure to speak with your Realtor to answer your questions further and to design a plan that is best for you.
Good luck!

Matt
0 votes Thank Flag Link Mon Mar 22, 2010
We all missed the last part of your question. Make it part of the contract that the seller is out of the house by 8:00 a.m. the morning of the signing. Look at it at 9:00 a.m. If they are not out they are violating the terms of the contract.
0 votes Thank Flag Link Mon Mar 22, 2010
I would ask for it literally just before the signing. That way if any damage was done you can see it before you pay for the house. What would happen if the seller took their furniture out of the house and in the process broke 3 windows and 2 doors and poked holes in 7 walls? 3 days earlier you might not have that damage. 1 hour before signing you would.
0 votes Thank Flag Link Mon Mar 22, 2010
The final walk through normally accomplishes a couple of matters. First it is a time for the buyers to inspect the property relative to the repairs that may have needed to be done.

Secondly is serves as a time for the buyer to inspect the property to make certain that it is in the condition that it was when they went to contract. Making sure there has been no damage to the property and that no items have been removed that should remain on the property.

This inspection should be done should be done with enough time prior to the closing so that any deficiencies can be resolved without extending the closing time. Generally 24 to 48 hours will suffice.

Good luck ,

The Eckler Team
0 votes Thank Flag Link Mon Mar 22, 2010
Hello Ken,

It all depends on what you agreed to in the Purchase Agreement. The final walkthrough or final verification of condition as it reflects in the Purchase Agreement typically takes place within 5 days prior to close of escrow, unless otherwise agreed to in writing. The purpose of the final walkthrough is to confirm that the home has been maintained in the same condition as when your offer to purchase was initially made. It's purpose is not as a contingency of sale. Any agreed upon repairs by the seller must be completed by this time as well, unless otherwise agreed to in writing. With regards to occupancy you must also refer to the Purchase Agreement. The time period for the seller to move out and the buyer to move in can vary. I recommend that you speak with your Realtor regarding your concerns and to verify what was infact agreed to in writing. Good luck!

Matt
0 votes Thank Flag Link Mon Mar 22, 2010
Hello Ken,

It all depends on what you agreed to in the Purchase Agreement. The final walkthrough or final verification of condition as it reflects in the Purchase Agreement typically takes place within 5 days prior to close of escrow, unless otherwise agreed to in writing. The purpose of the final walkthrough is to confirm that the home has been maintained in the same condition as when your offer to purchase was initially made. It's purpose is not as a contingency of sale. Any agreed upon repairs by the seller must be completed by this time as well, unless otherwise agreed to in writing. With regards to occupancy you must also refer to the Purchase Agreement. The time period for the seller to move out and the buyer to move in can vary. I recommend that you speak with your Realtor regarding your concerns and to verify what was infact agreed to in writing. Good luck!

Matt
0 votes Thank Flag Link Mon Mar 22, 2010
Dear Ken

In situations where my clients are unsure that the seller will be out of the home by the close of escrow or have taken all of their personal property out of the home by COE, then we have requested that a small amount of money, lets say 2500 held in escrow until after the close of escrow to ensure that all personal belongings are removed. In most cases the seller does comply with the contract and if not, there needs to be enough so that you can dispose of the property or charge the seller a rent back for each day that the items are left in the home. Usually that is negotiated upfront and may be difficult for you to negotiate now. Good luck and if you have any questions, feel free to contact me.

Best
Denise Laugesen
#1 Producing Agent
Cashin Company
Email: deniselaugesen@comcast.net
Direct Line: 650-403-6225
Cell: 650-465-5742
Website: http:/www.deniselaugesenteam.com
DRE: 01011089
0 votes Thank Flag Link Mon Mar 22, 2010
Hi Ken

It depends on what your contract says. If the contract indicates that the seller has to be out sometime before the actual close, then yes. If not, then they are not required to be out until the actual close. I would suggest a conversation with your agent about refusing to sign loan documents - that could cause you just as many problems, if not more, than the seller.

Best wishes
Vicki
0 votes Thank Flag Link Mon Mar 22, 2010
Hi Ken, I cannot give you legal advice, but the walk through usually is 2-5 days prior to closing. The home should be broom swept clean, and yes, the seller should be out before closing unless they have a rent back. As long as the seller is out by the time the home is recorded in your name, they have every legal right to stay.

As for refusing to sign your loan docs, unless you have the walk through as a contingency, you cannot just walk away without a possible penalty. You should consult a real estate attorney for that.

Hopefully your agent wrote in the contract that the home should be vacant at the close of escrow. But some things are out of your control, and that goes for your agent as well.

I'm sorry your transaction hasn't been more enjoyable.

Tap
Cashin Company
http://www.DavidTapper.com
http://www.TeamTapper.com
0 votes Thank Flag Link Mon Mar 22, 2010
Your agent can best advise you by the way--What does your contract state as to when the sellers need to be out--unless stated otherwise in the contract-- the seller needs to be totally out the day of the closing--as for your walk through, it can take place whenever you like--can be the day of the closing, day before, etc--again your agent can best advise.
0 votes Thank Flag Link Mon Mar 22, 2010
Ken
you should refer to your contract and ask your agent.
but typically the seller needs to be out of the property by 5PM the day of close.
since you typically need to sign closing documents 3 or 4 days before close, i see no practical way you can "refuse to sign closing documents if seller does not move out by time of closing".
There will be no close until you sign closing documents. You can't close if you do not sign closing documents. So there is no way to get seller out before close. Now maybe you can get seller to move out a few days before close but I doubt they would do that.
Does this make sense?
Your question is a legitimate one but ultimately you are just going to have to take your chances.
If the seller does not move, you will need to legally evict.
If sale was NOT a short sale then you might be able to negotiate a "security deposit hold back" where the title company holds $2000 or $3000 of sellers' money until they vacate. If they don't vacate on time, then you can receive some of the money held by title for every day they are late getting out - also could be used towards any damage seller makes when moving out.
But since seller is getting no cash out of short sale, there is nothing to hold.
Hope that makes sense.
Hopefully, you are buying property at a good price so even if you have to hassle getting seller out, you still have a good purchase.
Please let me know if you have further questions.
Arn
0 votes Thank Flag Link Mon Mar 22, 2010
Typically, a Final walk through is done after your requested improvements and repairs have been completed by the seller. I would ask for all receipts and invoices before or during the final walk-thru to keep track of what all was done at what time and by which contractor.
0 votes Thank Flag Link Mon Mar 22, 2010
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