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Use and Occupancy
Hi again! You can read my post below for our situation. The short version is we were ready to close on a house until the 80-something year old original owner decided she didn't want to sell anymore. After lots of back and forth the seller is asking to close August 2nd but assume "Use and Occupancy" until August 14th. Her reasoning is that she is purchasing a new condo in a retirement community and needs the closing money from us to close on her new place. She would pay us a "Use and Occupancy" fee for the two weeks she lived in "our" house and $3,000 would be held in escrow. In the case she doesn't move on the 14th she's charged a $300/day fee and is a "licensee" not a tenant, so she isn't afforded tenants rights.
I'm inclined to go with this, even though it puts us at some risk. The earlier we close the earlier she reaches a point she can't back out, right?
Has anyone had an experience with this? A friend in RE suggested getting the paperwork from HER home purchase to verify that her close date is by August 14th.
Re: Use and Occupancy
Hello--
I remember your previous post. I don't have any personal experience with this kind of arrangement, but I've heard of it. Although it certainly isn't the norm, it's not that unusual either. It typically works just like you are describing. Money is put into an escrow account...usually with a neutral third party like the title company or a real estate attorney...and then her "rental" portion is turned over to you when she moves out and after you have had the opportunity to inspect the property and ensure she did not cause any damages during her two weeks living there while it was your house.
That's a hefty penalty fee! Good incentive to make sure she gets out on time.
I personally wouldn't be bothered at all by this arrangement, but then I am also a landlady so I'm used to people living at my property, lol. I'd consider the risk pretty slight. After closing, YOU do own the house. In a worst, worst case scenario, she doesn't leave. While I don't know what the eviction process is for a "licensee" rather than a "tenant", I suspect the "conclusion" looks about the same. With her being escorted out by a sheriff and her stuff being thrown out onto the front lawn. I just don't picture an elderly lady who has been a homeowner for 40 years putting herself in that position!
If it would give you piece of mind, I'd find out from your agent if it is appropriate to ask to see her paperwork for the condo purchase's closing date. It seems like a reasonable request to me, but maybe for some reason it isn't. You can also talk to your lawyer...or if you don't have a lawyer...the title company's lawyer, and find out what your remedies are for eviction if she doesn't leave after August 14th. And how long that process could take in a worst case scenario. But again, I highly doubt it would ever come to that.
For as much negativity there is in the news and on the Internet about the world we live in and the scammers who are out there...the vast majority of people are good and fair people, who do what they agree to, and don't want to cause any waves. Now I hope I haven't jinxed you
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Thanks @short+sassy! I feel similarly, and at this point we really just want to close on the dang house! At least if we do have issues getting her out on time the $300 a day will really put pressure on her to get going. We plan on getting the house reroofed and the floors refinished before we move in, so if she ends up staying an extra day or two it won't kill us, but an extra week or two would be problematic. Our lawyer actually upped the amount held in escrow to 5K just in case.
@mommyliberty5013 From my discussion with our lawyer both the seller and I would have homeowners insurance simultaneously. Meaning we get ours activated on closing and she keeps hers active until she moves. If its something structural in the house (roof springs a leak, pipe bursts) then our insurance covers it, if its her fault (leaving a stove on) hers will. She would need to get separate renters insurance to cover any personal property of hers.
There are definitely risks involved (what if something happens and both insurance companies claim the other is liable?) but its small compared to the risk of not getting this house and having to move to another apartment for a year while we find a new place.