Should You Consider Allowing The Buyer To Move In Before The Close?

Written by Tarlika Sehgal

 Home sellers will negotiate a wide variety of factors with buyers, ranging from the price to whether the chandelier in the dining room is staying or going. In some cases, a buyer may ask if they can move in before the sale is officially closed. You may consider this a reasonable request, as there are several reasons why a buyer may want to take early possession of the property.

Reasons for moving in early

For one, if the closing is to take place not long after the start of the month, the buyer may want to move in early so they aren't saddled with another rent or mortgage payment on their former property. They may simply be looking to take advantage of the weekend so they can start moving in their belongings without taking time off from work.

Naturally, you won't be able to let a buyer take early possession of the home unless you’ve vacated it by the requested move-in date. You'll also want to be extremely cautious about granting this privilege since a number of things can go wrong with the arrangement.

What could go wrong?

Most home sales advance to closing. However, one of the biggest risks of letting a buyer move in early is the possibility that the sale will fall through. The sale might fail to go through if the buyer can't qualify for financing or is otherwise unable to meet the terms of the sale. In this situation, you will be tasked with evicting the buyer, re-listing their home, and resuming responsibility for mortgage payments, utilities, and other expenses on the home.

Removing buyers from a home after a sale has collapsed may be easier said than done. The buyers might refuse to leave, forcing you to take legal action; even then, the matter can easily be tied up in court for several months. Once a buyer is out of the property, you might discover that they have made changes to the home or left behind half-completed improvements. In some cases, the buyer may have even trashed the property.

Allowing a buyer to move in early can prolong or even sabotage the sales process after spending some time in the home and going back on their offer. Alternatively, they may notice certain things about the property that they dislike and ask you to fix them or reduce the asking price. This can be especially irritating if the requests are for non-essential items.

Early possession can also complicate matters in the event of injury, property damage, or unexpected events. Since you still own the property until the closing, you may be held responsible if someone gets hurt on the property or the buyer fails to get a building permit for the work they start on the home.

In rare cases, early possession can lead to calamity. This occurred in one transaction where the repainting work buyers were completing before they took possession accidentally resulted in a fire that destroyed the home. Homeowners insurance will usually provide compensation to you for such damage, but the buyer might not have coverage for any belongings they have moved into the property.

I still want them to move in early

If you are open to letting a buyer move in early, you should draft an agreement to help ensure that your pre-closing stay will be uneventful. It is essential to have a lease agreement separate from the purchase agreement to cover the time they will be staying in the home before the closing. If you ultimately need to evict the buyer, it will be much easier to do so under the lease agreement than if the buyer is considered to be "in possession" of the property under the purchase agreement.

By taking early possession of the property, the buyer will essentially be living in a home on which you've already made the mortgage payment for the month. So the lease agreement should include a rental fee for each day the buyer stays in the home before closing. You might simply divide your mortgage payment into a cost per day, or you can research rents for comparable properties and set this amount. Decide whether you or the buyer will be responsible for utilities, trash collection, and other expenses during the early possession period.

Treat the agreement like a standard rental arrangement. This should include an earnest money deposit as well as a damage deposit from the buyer. You should also take photos of the home's condition before the buyer moves in so you'll be aware of any damages if the sale falls through and the buyer moves out. You may want to purchase a home warranty plan as well. This will help avoid problems if the buyer experiences problems with any appliances or home systems when they move in before the closing.

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