Buying & Selling at the Same Time: Part III

Read the first two posts in the series here (Home of Choice contingency) and here (Home Sale Contingency).

Our next tool is a two-for-one: Occupancy Agreements.  There are Pre-Settlement Occupancy Agreements and Post-Settlement Occupancy Agreements (aka Rent-Backs).

Occupancy agreements help facilitate a buyer’s or seller’s move date when it doesn’t coincide with a settlement date.  They essentially act as pseudo-leases, with one party as “landlord” and another as “tenant” (though it’s important to note that those words are not used explicitly.  Landlord-tenant relationships create all sorts of new requirements, especially in DC.)

Why would a seller need a rent-back?  Usually it’s because of the timing of receipt of funds. Often a seller needs to proceeds from a sale in order to buy their next home.  But in some jurisdictions, like Virginia, funds are not released to the seller until the deed and mortgage are recorded at the courthouse, which could be days after settlement.  Even if proceeds are received the same day, banks often put holds on checks so the cash may not be immediately available to a seller.   (The timely transfer of funds is the reason that many sellers will request a particular settlement company, too.)

Why would a buyer need a pre-occupancy agreement? Generally because their lease timing or their own sale (in the case of a move-up or move-down buyer) doesn’t coincide with settlement.

What protections does the “landlord” have during an occupancy agreement?  For one, a deposit, just like in a lease, plus a clause that any damages will be paid for by the “tenant.”  There’s a walk through of the property at settlement, and also one at the conclusion of the occupancy agreement.

There are a lot of other clauses in a standard Pre- or Post-Occupancy Agreement.  Make sure you discuss the risks with your agent.

********

Read more: $8000 First Time Buyer Credit Extended and NEW $6500 Home Buyer Credit

Search the entire MLS

Read more: Myths About Choosing a Listing Agent

*********

Tweet This Post

Ready to start your search? Contact me and we'll meet for coffee to see if it makes sense to work together. Not in the DC area but need a recommendation for a good real estate agent? I have a nationwide network -- just ask me!

Related posts:

1. FAQ: Why is the Buyer’s Agent Called the Selling Agent? Buyer Agency Agreements Explained. Buyer’s agents, seller’s agents, listing agents and selling agents…just how...
2. Tips for Newly Engaged or Married Couples Buying a Home Together I often work with couples who are newly, or soon-to-be,...
3. How Do I Protect Myself if I Need to Buy and Sell a House at the Same Time? (Part II) This is the second part in a series about tools...
4. Is Buying a Home One of Your 2010 New Year’s Resolutions? Get started by attending a free, no obligation first time...

Related posts brought to you by Yet Another Related Posts Plugin.