Buyers beware: Seller occupancy after closing

When the seller needs additional time after close and plan post-close occupancy, buyers may wish to consider some ramifications. Will this effect your financing? How about insurance issues? Who will cover costs? … repairs? … substantial losses? Anibal-Group-LLC-All-Over-USA


  • Use and Occupancy Agreement – Seller to Remain: Principle residence – form/agreement, general in nature.
  • License for the Limited Use and Occupancy Agreement – form/agreement, more specific in nature for use of subject premises.
  • leaseholdtenancy and complexity of legal rights and obligations
  • lease – transfers “possession”, and
  • license – grants “only the right to use the premises” – a license to use and occupy, and nothing more. As a preliminary matter, it’s probably not a bad idea to refer to and title the agreement between the parties as “a license for the limited use and occupancy” of the subject premises, rather than simply a “use and occupancy” agreement


  • Ask Lender: Will non-owner occupancy effect financing?
  • Ask Insurance agent:
    • House burns down – sellers is living there – post close, who pays?
    • House burns down – sellers has not surrendered keys, not living there but has possessions still there – post close, who pays?
    • Slip n fall – who pays?
    • Do you need landlord insurance?
    • Appliances included break, drain or HVAC fail – who pays?
  • Ask Lawyer:
    • For an agreement to cover possible losses
    • Word agreement that will not create for seller ‘tenant rights’
  • Ask Accountant:
    • If the seller pays $X/day for more than 10 days overstay, is this rental income?


  • Whether an agreement creates a lease or license may be determined by:
    • a) the extent of the parties’ control over the premises;
    • b) the language of the agreement;
    • c) the intent of the parties;
    • d) the duration of the expected occupancy;
    • e) whether usage payments are made on a day to day basis;
    • f ) whether the occupant is free to leave at any moment.
  • Limited Use and Occupancy Agreement (may include such items as):
    • Seller pays per diem amount of $____  ( Usually at least covers: mtg pyt, ins., taxes).
    • Escrow held to be released after surrender of keys and complete removal all items & debris not included in sale. ‘Broom clean’ vacating includes but is not limited to: house/ garage/ attic/ yard/ out-building(s)/ with no trash remaining at curbside. Escrow for potential damage, hold-over, & buyer satisfaction of post move-out inspection $____ (e.g.: 3% of purch. price).
    • After _____ days (e.g. 30), per diem occupancy will increase to $____ (e.g. 1.5 – 2X otherwise).
    • Seller is responsible for risk of loss during post close hold over & will deliver in good working condition, the property, items included w/ sale, HVAC & plumbing.
    • Buyer may enter premises at any reasonable time to inspect property.


Links for further reading:

Please seek you own professional legal, tax, real estate, and insurance advice – not to the reliance of this article.