Whoa!  Here’s a touchy situation.  My opinion is “absolutely not”. Here’s why. ( Just remember there are always exceptions!)

If a seller lets the buyer move in prior to the closing so many things can and do go wrong.  I just read where the sellers gave the buyers permission to paint a vacant house prior to closing.  Although the painters covered the hardwood floors to keep them clean, one of the drop cloths was covering a floor furnace.  The furnace came on during the night and — you guessed it — the house burned down!

In another situation a seller agreed to let the buyers take occupancy in return for releasing part of the deposit to the seller.  Once inside the sellers refused to close and the buyers had to file a lawsuit.  This can take months and even years.

I had another situation where the seller let the buyers take occupancy without telling their realtor or attorney. Turns out this ’seller’  didn’t even own the house – her ex husband did and he didn’t agree to the sale!  Very messy.

In my opinion if the buyer needs a place to stay until the property closes let them stay with a relative, hotel or go on a vacation.  Do whatever you need to do to avoid letting them take possession of the property prior to closing.  If a problem arises, a resolution can result in a lengthy and expensive litigation.

There ARE however exceptions and I have had several very successful situations where the buyer has taken occupancy prior to closing. 

First, get the attorneys involved.  If they agree, have the attorneys draw up an agreement to be signed by both parties.  Similar to a lease agreement and there should be monetary consideration to the seller as well.

There is something called a “hold harmless” agreement.  The buyers do a final walk through of the property agreeing that all is in place for the closing.  Sellers should take extensive photos and/or a video of the property and its condition so that there is no dispute abut the condition of the property if the buyer fails to close.  The hold harmless agreement basically releases the seller of all future responsibilities for the property.

Make sure the buyer, now a tenant, gets the proper insurance.  The seller should check with their insurance company as well to inform them of this situation.  This is now basically a short term rental.

The bottom line is I would not want any of my clients to do what I wouldn’t do.  Would I let the seller take possession of MY home prior to closing.  Absolutely not.

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