Lancaster County PA Realty Check: September 2007

Sellers - Don't Let Your Buyer Move In Before Settlement

Sellers - Don't Let Your Buyer Move In Before Settlement

Every so often, when a vacant house is for sale, a buyer will have a situation where they need to leave their current home before their settlement on the new house.  They may be renters whose current home is being sold to someone else and they are being forced to leave.  Sometimes the house they are purchasing needs work, and the buyers want to take possession and do the needed repairs themselves before settlement.

It may seem easy for the seller to have their agent write up a pre-settlement occupancy agreement, and receive a little rent before the settlement.  Please trust me on this:  DON'T DO IT! 

What will happen virtually every time is that the new buyer, after moving in, will discover little things (or not-so-little things) that they hadn't noticed originally, and want the seller to either fix them or make an adjustment off the price of the home.

Buyers have ample opportunities to thoroughly inspect houses before they purchase.  Buyers have the right to ask for a professional home inspection, and I highly encourage them to do so.  The purchase can be made contingent upon a home inspection report satisfactory to the buyers.

However, if the buyer is allowed to move in before settlement, the seller is asking for trouble.  Let me give you an example:  I once had a chain of four homes waiting to settle.  I had a buyer for a townhouse.  The seller of that townhouse was buying a small detached house.  The seller of the small detached house was buying a larger detached house.  I was representing the seller of the larger detached house, and they were also going to buy a luxury home.

You can see that I was highly invested in making this whole series of transactions work!  My seller of the larger home wanted to move into the luxury home, which was vacant, a month before settlement so they could redecorate.   A pre-settlement occupancy agreement was negotiated, and they moved in.  Even though they had had a professional home inspection beforehand, once they move in and started redecorating, they found a number of issues that they were not pleased with.

Some of their complaints were reasonable, and some weren't reasonable.  They threatened not to go through with the purchase if they did not get a large reduction in the price.  Of course, if this sale didn't go through, all of the other sales that were dependent on it would fall through as well.  Even though some of the demands were unreasonable, the seller of the luxury home was forced to make expensive concessions.

Let me emphasize that buyers need to take every opportunity to be sure that they are familiar with the condition of the house that they are planning to purchase.  But once the inspections are made and the buyer is satisfied with the results, possession should not take place until the financing is "clear to close" and the settlement takes place.


Brian Schulman offers expert real estate representation for buyers and sellers of homes in Lancaster County, PA.  To learn more, visit

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Comment balloon 8 commentsBrian Schulman • September 28 2007 08:18AM
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