Moving In Before Closing: Don’t Do It
– Daniel Jacuzzi – President
Sometimes the best-laid plans often go awry. Closings can very well take longer than anticipated, throwing in a logistical nightmare for some buyers who have to vacate their current property at a certain deadline. So, what’s the harm in allowing buyers to move in early before the close of escrow? For starters, it can create an additional nightmare for both buyers and sellers, one that nobody wants to deal with.
There are potential legalities at play here. Renovating a property and moving heavy furniture has the potential for confusing boundaries. Not knowing who would be responsible for any work-related injuries or building code permit violations is a recipe for disaster. There is the possibility of a change of heart, last minute lender refusals, or incorrect work permits. There’s simply too much that could go wrong, resulting in a large cost.
Allowing buyers to possess the property before closing is a huge risk. Consider all the things that could go wrong and what the required cost to rectify it would be, in time spent and monetarily. If it is necessary that the buyers move in prior to closing, there are some things that can be done to protect all parties.
- Document the exterior and interior of the property. Require signatures from both buyer and seller stating they approve of the property’s condition.
- Create a lease agreement. The Lease Agreement needs to include a deposit, rental rate, and also address. What will happen if the escrow does not close? In addition, the Document must include what a buyer may or may not do with the home prior to C.O.E.
- Place a home warranty protection plan.
- Make sure that both Buyer and Seller have and maintain proper insurance.
- Have the Buyer put 100% of their Down Payment into escrow.
While doing all 5 of these items will not guarantee success, it will reduce future headaches if the sale falls through.
Very helpful! Thanks