Post Closing Occupancy Agreements are now a very common request in the Denver market. What a Post Closing Occupancy Agreement does is allows a Seller to close on their house, and then live as a ‘renter’ in their house and the Buyer becomes the ‘landlord’. A Seller would normally request this if they are uncertain about where there next home or accommodation will be and gives them peace of mind that they have a bit more time to work with to avoid a double move. There is an actual contract for this that accompanies the Contract to Buy and Seller which is part of the negotiation when submitting an offer and this contract outlines who is responsible for what.
So some common questions that come up are
How long can you have one for?
Well an average contract is around 30 days. A seller can then request a Post Closing for up to 60 days from the closing date. 60 days is the golden number because as most Buyers come with a loan, they have to sign a document at closing to say they will occupy the property within 60 days. If a Buyer buys the home with cash, a buyer and seller can decide between themselves.
Another question is who pays for the time in the home?
This is part of the negotiation. In a very strong Sellers market, a Seller can usually get away with having the whole time for free, or sometimes you can have the first month for free and then pay a rent for the second month. As a buyer, one thing to remember is that when you close on a house, your mortgage payment is paid a month in arrears. So for example, if you close in March on any date, your first mortgage payment would be May 1st. So we can structure an offer that closes at the beginning of a month to avoid that.
Utilities can then be negotiated. And if its a longer period, we would normally expect the seller to buy for them. For shorter times, the buyer may pay for the water (which transfers with the property) and have the seller continue with gas and electricity,
If you are a buyer watching this, please make sure you are fully comfortable with this when writing an offer. I’ve seen situations where buyers will do absolutely anything to get a contract accepted, and then forget all this when they close and become impatient to want to move in. It really is short term pain for long term gain. And if you are a seller watching this and feel you want to move but don’t know where to go, this really is a great option. I have never yet had a client homeless. I always say, where there is a will, there is a way!
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