Damages when sellers are moving out

Asked by Richard, Simi Valley, CA Mon Jan 3, 2011

I select a house, finish inspection, appraisal etc and close to closing escrow. Seller wants additional time to move out and we argue. Finally seller agrees to move 1 week after COE - is this allowed? Is he not supposed to vacate before COE as per the purchase contract house needs to be handed over at 5 pm on COE.
What happens if he has caused some damanges in the house during moving. The house is a short sale and bank said we need to buy it AS-IS but that does not mean they can do additional damages and walk away. Please advise.

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Dallas Texas, Agent, Dallas, TN
Mon Jan 3, 2011
Where is your buyers agent address all these issues.

IF THE SALES CONTRACT STATES you take possession at close they are to be out of the property. IF NOT you need to amend the sales contract for them to lease back to you.

You do a walk through x or xx hours prior closing for confirm no damage. HOWEVER if sales agreement states AS-IS not much you can do.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
1 vote
Janey Bishop, Agent, Encino, CA
Tue Apr 10, 2012
Will he be staying there or is it his belongings? Your realtor should be negotiating this for you. You may be limited in a leaseback due to the short sale agreement but your realtor has all the paperwork to advise you. I hope have someone representing your interests other than the listing agent.

If you made a good investment assume there could be a nick or two that can be easily fixed when you do your own decorating.
0 votes
Sabrina Simp…, Agent, Moorpark, CA
Sat Jun 4, 2011
In every short sale I've been involved in, the bank does not allow seller to rent back or stay in the property at the close of escrow. Check the short sale addendum that both the seller and you signed prior to the close of escrow. There should be a paragraph regarding this issue.
0 votes
Ponch Co, Agent, Huntington Beach, CA
Wed Jan 5, 2011
The one week extention is subject to an agreement negotiated as a rent-back between the 2 parties (preferrably should be arranged by the listing/selling agents involved) otherwise, the occupancy of the original owners is a breach of the sales contract if there is no agreement. New damages left by the original sellers after the close of escrow (if there were no rent back agreements) are still the responsibility of the original sellers. You need to go after them. The bank involved in the short sale is not responsible.
0 votes
Michael Mont…, Agent, WOODLAND HILLS, CA
Mon Jan 3, 2011
All contracts are negotiable and should always be in writing. The sellers agent should submit a request for extension of escrow addendum (CAR FORM) stating the new proposed move out date. If you do not agree your agent can send a demand to close escrow (CAR FORM) that will specify possible damages. The other question you ask is if the seller damages the property. Because this is a short sale. The owner of record has permission to short sale from the bank at a specific price. The seller's agent should be notified of any damages noticed that are different than the shape of the property at the time of your offer. The bank can agree to or deny your request for a reduction if damages are noticed. Make sure you request a walk through/verification of property condition before the home funds in time for you to make your case with the bank for a reduction if there is damages that did not exist at the time of your written offer to purchase the property. The reason I suggest the bank is in a short sale the seller will likely not compensate willingly especially if they cause the damage. You are entitled as is from the seller if that is your agreement. Usually meaning (unless otherwise specified in writing) the property should be in the same as is condition as when you wrote your original offer excluding detached personal property. As is is a statement often used by many agents. I hope you had a home inspection to detail in writing the what condition the home was in at the time of your offer. You should also have a TDS transfer disclosure statement and lead base paint addendum if the home was built pre 1978. If these were not provided this offers you cancellation grounds as well. You can always make requests. I suggest a real estate attorney for legal help. You may be entitled to cancel the whole transaction if damages are severe with no compensation offered. Above all else protect your deposit and consult legal advice if necessary. I hope this helps. I hope it works out for you. Happy New Year
0 votes
Ted Mackel, Agent, Simi Valley, CA
Mon Jan 3, 2011

If there was no amendment to the contract and you were to receive possession at 5pm on the day escrow closes which in California typically means the day the deed is confirmed recorded, then you can go to small claims and ask for costs for each day they remained in hold-over and see how the court will treat the situation.

$7500 is the limit in Small Claims and it will be very difficult to get SC to agree that you are entitled to $7500 for 7 days hold-over.

If they damaged the property moving out, you will need to get estimates for repairs and ask for those in your small claims case as well.

Since this is a Short Sale and the seller will probably not have money to reimburse you; if you prevail in Small Claims, you will have a judgment against the Seller, but now you have to collect.

It is ultimately up to you to decide what dollar amount will motivate you to go to Small Claims. If you have possession and the damages are not large it might be better just to move on and not pursue it any further.
Web Reference:  http://www.homebuysblog.com
0 votes
Lance King, Agent, San Francisco, CA
Mon Jan 3, 2011

In a typical contract the seller is supposed to be out by COE. In reality sellers frequently ask for more time, and this can be handled in a number of ways. What we usually do is make the seller pay pro-rate per diem costs and leave a significant enough amount of money in escrow to cover damages so there is some recourse.

However, in a short sale situation there is obviously no money. If it were me, I would try to delay the COE till they are moving out and do a walk through before putting in closing funds. Having a supervised move-out with the buyer-broker on hand could also help avoid problems.
0 votes
Team Komar, Agent, Camarillo, CA
Mon Jan 3, 2011

In a nutshell, you should retain a buyer's broker who will have someone stand-by while they
vacate the premises. I have always found that helps. Short sellers have been given a gift
by their lender and most do not want to alienate that relationship since they can lower their
credit score considerably more if they leave a problem.

We find that usually takes care of the problem. I have listings in Simi Valley, and would be
happy to answer any questions you may have in the future.

Good Luck Richard.
0 votes
CJ Brasiel, Agent, San Jose, CA
Mon Jan 3, 2011
Richard -

First talk with your real estate agent to see how they can help. Secondly, consider consulting a real estate attorney. Possession is typically a part of the real estate contract. The short sale lender will not worry itself over your new "tenant". This is a risk associated with purchasing a short sale that many buyers are not fully advised on when they write the offer. Refer to the contract, then talk with an attorney. Sometimes a "legal" letter is enough to get everyone doing what they said they would do when they signed the contract. But recognize many short sale sellers do not have assets to go after so make sure your expectations are based on simply moving into your home when the contract stated in the condition it was in when you purchased it. The ability to obtain "damage" money from a seller who is most likely struggling financially may not be worth the legal battle. Each case is unique and only you can decide if it is worth it.

This is a real issue not addressed in many short sale contracts. If the house is occupied by owner or tenant, the contract should have a vacate prior to close of escrow amended contract. California eviction process is something a new buyer should really not have to engage in and the best way to hedge your bet is to write details like walk through inspections, and vacating premises clauses prior to money transferring from escrow.

I wish you the best in resolving this soon.
Web Reference:  http://www.TalkToCJ.com
0 votes
Eric H. Wong , Agent, Albany, CA
Mon Jan 3, 2011
Hi Richard;

Yes, in the best of all possible worlds, the seller will be out as the contract specifies, but in the real world allowances must sometimes be made. Just remember to keep your eye on the big picture. You are going to get a house.
This does not mean you should not protest yourself. If the seller wants to rent back the property, stay in it past the COE, you can charge them a per day fee. It is usualli principle, interest, taxes and insurance or PITI. Your agent can help you figure that out. This usually acts as an insentive for the seller to get out as soon as possible. Have the estimated cost held in escrow. I also have escrow hold a security deposit in case of damage or what not, usually $2500 depending on the property.

I hope this was helpful.
0 votes
Janey Bishop, Agent, Encino, CA
Mon Jan 3, 2011
What is the damage and who did it? Short sales are not as structured as a standard sale so it is not surprising that it is not as organized. The Seller lost their house. If you got a good price it may not be worth trying to fight with someone who has no incentive and not in financial position to remedy it.
0 votes
Bonnie Sterl…, Agent, Simi Valley, CA
Mon Jan 3, 2011
Hi Richard, you have asked a couple of questions in the last few days that had to do with a variety of issue if I recall, one was "for a friend" which really left the door open for other agents to comment, another was general enough, about refrigerators. But in this question, assuming you are the same Richard, is very specific to your contract and I am going to really recommend that since you are in a contract and have a brokerage representing you that you refer back to your brokerage. If your particular buyers agent is not able to provide you with a satisfactory answer, you should contact the broker of record that they work for. If you are not communicating well with your agent, your broker is really who the contract is with and they should take whatever time you need to help you understand the answers to the questions you are posing. These conditions are so specific to your own transaction that I would be hesitant to take more than very general advice from this Q&A forum and run with it or instruct your Realtor or Broker that the answers you recieve here apply to you.
Because others might be reading though, I want to provide some general response. Close of escrow and posession are negotiable terms and I do not agree with the advise of the first to answer. I would almost never recommend a lease back and I would recommend it even less if someone is a short sale occupant. A lease back creates a tenant landlord situation. You do not want to find yourself as the landlord of a distressed occupant. The lease agreement does not, to the best of my knowledge, create a special circumstance where you would not be required to evict the occupant if they refused to go at the end of the leaseback period. Leasebacks can leave a buyer very open and therefore should be entered into very carefully and only when the buyer is fairly confident that 1) They can handle the unlikely but possibility that things could go wrong (with inconvenience but without financial ruin) 2) Have verified the Sellers reason not to be able to move out and are confident that the situation will improve with the leaseback. Ideally, I think , you delay close of escrow or have a close of escrow plus 1-3 days, which is also a risk but does not create a formal written lease agreement. To learn more, I would recommend going back to your Realtor/broker or contacting a real estate attorney.

As for the issue of damage after move out, many home buyers express this concern. Again, this is a good reason to buy from a seller in better financial circumstances because they are more likely to want to peacefully resolve the situation. When damage occurs during the move out, the previous owner and the brokerages typically want to neogitate a good outcome. Many times, the homesellers do their best to address it on their own because its part of their pride in ownership, they realize that they sold something in particular condition and will do onto others as they would have others do for them, really it happens. Other times, everyone pitches in to avoid a legal matter. Each situation is different and some do end with attorneys and courts working it out with all the parties involved but hopefully, this is a last resort as you can imagine.
Web Reference:  http://www.SimiLiving.com
0 votes
Paul Aragon, Agent, Granada Hills, CA
Mon Jan 3, 2011
Even "As-Is" homes do not mean that you should have to be liable for the damage caused AFTER the date of the purchase contract. If there was more damage than after the initial date of the purchase agreement, you may have recourse in a small claims court. Talk to your agent to discuss the particulars of your contract. Also, you might also have monetary considerations for the seller not vacating the property after the negotiated close date. Nobody gets a free ride in California. You should talk to your agent...and if they cannot help you, spend the $150 to consult with a REAL ESTATE attorney to guide you through your rights.
Web Reference:  http://www.PaulAragon.com
0 votes
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