So you want to buy or sell a house, but you need a little breathing room and you don’t know how you’re going to work, the timing of that whole situation, especially in this market, what do you do?
One way that we often handle these logistics of literally moving targets with closing dates, times moving trucks, people moving in people moving out is with a possession by seller or possession by purchaser agreement. But what are those?
You may have heard that term, and sometimes the possession by the seller is actually called a rent back. That’s our common vernacular for that document, or that situation. And it’s called a rent back because basically, you as the seller are renting back your house after you close and the purchaser actually owns it. We do have another thing called a possession by the purchaser. That is very, very seldom used, because there are a lot of risks involved in letting a purchaser move into your house before you are actually close as you can imagine, they move in and they start putting wallpaper up or demoing the kitchen, and some reason, their deal does not close and you’re stuck with whatever they did when they were in your house and you’re also kind of stuck with them in your house, and you may accidentally become a landlord. We don’t use those very often.
The way that the possession by the seller works is literally just like the way you would rent a property. So you own the house, you know, you’re going to close on, say the 10th of the month, but you need to stay in for an extra week or two, we’re going to have a whole document that’s basically a rental agreement where the purchaser closes, and then you’re going to be renting that house back from them for the next week or two weeks, whatever. There is usually a deposit just in case you damage anything while you’re moving or getting all your stuff out. And you are going to have to cover that if that happens. There’s generally a per diem amount as well. So if you go past that, say, you’re supposed to close on your new construction, this is one where sometimes the closing dates don’t really line up the way we want them to say you’re closing on new construction on the fifth of the month. And that’s when your rent back ends on the house that you’re leaving. But the builder isn’t ready until the 10th, so you may have to pay extra, then for those additional days that you stay, or you may just have to beat it because sometimes the agreement was you’re going to be out on the fifth and sometimes that’s just what has to happen.
All of this can get really confusing and sound really confusing. In reality, it’s not that confusing, but a lot of it goes back to having a plan before you put your house on the market before you write the contract for the house that you fall in love with making sure that you sit down with your agent and kind of plan out that whole scenario. Sometimes hard when you’re really emotional about this process or you’re looking at all the other moving parts, but the times and the dates and all of that good stuff really get important, so having that plan is really key. I’d love to explain to you how that might work for you, so just give me a call send me an email, send me a message, and let’s set up a time to chat.