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Why buyers may need a post-closing occupancy agreement

On Behalf of | Aug 9, 2023 | Real Estate Transactions |

Those purchasing real property in Florida are typically eager to get the keys and take possession of their new homes. Those first days of cleaning and customizing a space while moving in personal possessions are what turn a specific property into someone’s home.

Buyers are typically eager to begin that process as soon as possible so that they can stop paying rent elsewhere. However, with the current real estate market being so competitive for buyers, those selling real estate often have reason for concern regarding where they will live after the transaction. They may not know how long it will take to find and close on a new home after the sale. Negotiating a post-closing occupancy agreement can be a way for buyers to protect themselves financially while making their offer attractive to a seller whose circumstances may be complicated.

What is a post-closing occupancy agreement?

A post-closing occupancy agreement is like a rental contract between the seller and the buyer. Some people will also call these contracts “rent back agreements.” The buyer effectively becomes a landlord if the seller needs to remain in the property after closing, and the agreement they signed before closing creates the rules for the rental arrangements.

Buyers and sellers can agree to a specific amount of rent per day. Usually, buyers will set that amount above the fair market value for a single night in rental accommodations to properly incentivize the seller to acquire housing and move as quickly as possible. Some buyers even increase the amount of rent over time and provide a final deadline after which the seller must vacate.

The arrangement can provide flexibility for the seller who may worry about where they will live after closing while helping ensure that the buyers don’t end up financially overextended because they need to cover housing costs elsewhere while paying a mortgage for property occupied by the seller.

Adopting thoughtful inclusions in offers and purchase agreements can make all the difference for those trying to buy real property in Florida. Integrating specific details into real estate paperwork can give buyers the confidence to move forward with an offer on what could be their dream property while facilitating their interests and demonstrating compassion for those who are selling property under complex circumstances.