Should A Honolulu Seller Give Occupancy To A Buyer Before Closing?
June 12th, 2008 categories: Honolulu Real Estate 101
So you sold your house and now you’re a couple of weeks away from the close of escrow. The buyer’s lease has run out and they have to move. You get a call asking that the buyer be allowed to move in prior to the close of escrow. What to do? What to do?
Here is the short answer…run for the hills! Don’t let it happen! Squash the idea like a bug! Just say “No”! Am I clear? Any questions? Now for the long answer.
Other than feeling like a nice guy or gal, as I see it, there is no upside for a seller granting occupancy before the new owner owns the home. What follows is a list of the potential negatives.
1. If the buyer can’t close (loses loan, doesn’t have the down payment, or dies), you may now have a hold over tenant. Their things will be in the home and now, in the best-case scenario, they will need time to move out. In the worst-case scenario, it is possible you would have to evict the buyer from the home.
2. If the buyer can’t close, your once pristine home may now need cleaning and repairs to make it market ready again.
3. Given the additional time the buyer may need to move, you could be losing valuable marketing time.
4. Think of an early occupancy as month long inspection of your property. I advise that you disclose anything and everything you know about the property, but is it possible that the buyer could find issues of which you were unaware? If they found something, do you think they might try to renegotiate the deal?
5. Under Hawaii Law, if a material issue is discovered during the escrow process a buyer earns an additional 15 days to investigate the problem. If during this 15-day period the buyer decides they cannot get comfortable with the issue, they will have the right to terminate the sale no matter what document they may have signed. Wouldn’t that be nice, especially since they are now living there.
6. Once the buyer is in the home, is it possible they could start painting and remodeling? Of course it is. If this happened and the closing didn’t occur, you could end up having to finish what the started. This is getting better with every point!
I am sure this is not a complete list, but I wanted to help seller’s understand their exposure to giving the buyer early occupancy.
Today’s picture was taken from Lower Makiki Heights looking toward Roung Top.
From a Seller’s point of view, I cannot think of a more down-sided decision to allow a Buyer to occupy a subject property prior to recordation. There is absolutely, positively ZERO, NADA, ZILCHO upside in allowing it.
Don’t be a fool…. listen to Keahi’s advice, it puts unnecessary pressure for all parties. If you’re a Buyer, you should have planned better, but stuff happens. In any case, stay with your family, stay in a hotel, anything but early occupancy!
Nuff said!