Early occupancy occurs when there is an agreement between buyer and seller for the former to take possession of the property before official closing.
This can happen when the house is vacant as the owner has already moved out and the buyer wants to use the premises as soon as he can.
It is especially desirable if the buyer is currently renting places to stay with short term contracts. Each extra day of early occupancy mean a day of rental expenses saved.
For example, if a family is currenly paying $100 a day for accommodation in a hotel, that $100/day would be saved with each day of early occupancy.
This is why early occupancy agreements are almost exclusively made on the buyers’ request as a seller has little to gain other than goodwill.
The benefits of early occupancy almost always overwhelmingly favor the buyer.
However, there are risks that both sides of the deal can assume when such agreements are made.
Buyer and seller risks
While there’s nothing illegal with that, both parties will be taking on extra risk that can result in the deal falling through.
For example, the buyer might find material defects within the house.. And since the transaction has yet to be completed, he could take action to change the terms of the deal or even back out. The generous gesture on the part of the seller can turn out to be a fatal mistake.
The buyer also assumes the risk that should something happen to the house or it’s inhabitants during the period of early occupancy, he could be liable.
This is because the owner would technically still be the seller until closing officially occurs.
On the other hand, seller might still be emotionally attached to the house. And watching it being abused by the new owner during early occupancy might convince him to renege on the deal. He might be liable for damages. But he would at least be able to live with himself for taking care of a house with strong sentimental value.
The onus is that unless early occupancy is essential for a deal to happen, a seller should refrain from such concessions to avoid unnecessary risks and trouble.
