There are times during when a home is being bought and sold that unusual circumstances may arise. I have seen situations where either the buyer wanted to move in before closing or the seller needed to remain for a period of time after the closing due to personal circumstances. I always warn both parties against this type of arrangement.
I understand that unexpected things happen in life, and most people want to help others when they can. Something as small and seemingly insignificant as allowing the person that just sold you their home to stay an additional week after closing because their new home closing has been delayed might not seem like such a big deal if you can accommodate, right? After all, if you can stay where you are without undue hardship why not help them out of a difficult situation? Well, its not quite that simple.
By allowing such a request you are now entering what can legally be considered a landlord-tenant agreement and that can change everything. As an example, what if the unthinkable happens and their financing falls through? What if suddenly they can no longer buy the home that they were supposed to move into after selling you theirs? As the new owner you do own the property but how do you get the previous owner to leave if they refuse? Legal action can be arduous and timely, leaving you in limbo. Can you afford to pay rent and the mortgage on your new home at the same time until the matter is settled or the tenants finally move out?
As if that isn’t enough to consider, there are many other things that can happen as well. Insurance issues are another major concern. Many policies do not take effect until the new owner actually takes occupancy of the new home. This means that as the policy from the previous owner has no doubt elapsed, your new home may be without insurance protection of any kind. What if there is a fire or some other kind of emergency and the home is damaged? What if the people living there now damage the property in some way? This list of unexpected variables is endless.
If you’re not yet convinced that this type of situation is not in your best interest, consider this. It would not be unheard of for the previous owner to leave the home in less than perfect condition, even if they do stay only for a very short period of time. Even if there are no huge tragedies that happen during this time period, there will likely be some type of misunderstanding. Whether its mistakenly taken appliance, or a mystery stain that suddenly appears, any type of post closing damages are unwarranted costs incurred.
No matter how small or innocent the misunderstanding, these types of situations are never going to be perfect. As a general rule, follow the closing instructions: the seller vacates, the buyer overtakes. Helping others is always a great thing to do, but risking the biggest investment of your life is foolhardy.