Pre-Closing occupancies can be a tricky area to navigate for both sellers and realtors as there are many factors involved which open doors to a dead end contract along with other problems if not done thoughtfully. It is important for sellers to be aware of the issues and to know what is at stake before engaging in this kind of contract. For most, it would not seem an issue to allow new buyers to move in before the contract is fully accepted. If anything, it could only be solidifying the contract? Wrong. There are many legal and financial considerations to take place beforehand.
To start with, the seller should discuss with their insurance agent that he/she will be protected during the term of the agreement. Equally, the buyer should obtain a rental policy for their personal belongings, as well as general liability coverage which should also name the seller as additionally insured. Insurance coverage for both parties is crucial in case anything should go wrong during the agreement and both the buyer and seller will be protected in case of any such event where damage occurs in the home.
It is also likely that during the time of the pre-closing occupancy buyers will be noticing many details that they may have overlooked on the first inspection. This might provide a change of heart to buyers and the risk is particularly high for sellers if certain contingencies have not expired or have been waived if there is financing on the deal. It is also important to note that situations for people can change and if you have a buyer living in your house, the seller can not simply re-list their property while under a PCCOA.
A PCCOA can work well for many but it needs to be specific and well prepared for bother parties to avoid any issues later down the line. A good PCOAA will have in its contract specific on rent, security deposit, insurance requirements, responsibility for utilities, responsibility for maintenance and a prohibition on buyers from making any changes or renovations.