buyer possession

When the Seller Refuses to Move Out on Time

seller refuses to move out on time

When the seller refuses to move out on time, it causes complications for everybody.

One of the worst things that can happen in any escrow is dealing with adversarial buyer possession that can arise when the seller refuses to move out on time. The reasons a seller may refuse to move out are numerous. The seller might not have been made aware of the date of closing. Although our transaction coordinators send out an estimated timeline, not every listing agent will respond to the timeline. Some will not send it to their sellers. Some listing agents don’t hire a transaction coordinator, either. Or, sometimes listing agents don’t know how to count the days to closing in a purchase contract. In which case they give the wrong date to the sellers.

When the seller refuses to move out on time, it can hold up the closing. It can also put the entire transaction at risk. Once the buyer issues a Demand to Close escrow, if the seller doesn’t close on the contractual date, the buyer is free to cancel the transaction without putting the buyer’s earnest money deposit at risk. The buyer might decide the seller is in breach of contract. If the buyer suffers financial consequences as a result, well, let’s just say I would not want to be that listing agent or that seller.

The other issue that arises is the buyer’s final walkthrough. Our California purchase contract allows for such an inspection within 5 days of closing. Sometimes buyers make unreasonable requests such as they might insist that the seller remove all items from the house prior to closing. However, a seller is not required to completely move out until the date in the contract. The date in the contract, for better or worse, is the day of closing at 6 PM, unless otherwise agreed to in writing.

The time to think about when buyers expect a seller to vacate the house is at the time the buyer’s agent prepares the offer. That is the time to negotiate an early move out if that is what the buyer desires. A buyer should not demand the seller move out early when the buyer has only a few days left until closing. That is being unreasonable. Completing the final walkthrough can be more difficult when the sellers’ belongings are still in the house, but that’s what a buyer gets when the buyer does not negotiate an early move out upon contract inception. The buyer is stuck.

Your best bet is to work with the seller when the seller refuses to move out on time. Either move the closing date to accommodate the seller’s move or play hardball and cancel the escrow after issuing the Demand to Close escrow. There are no seller move-out police. You can’t call the cops.

 

Can Buyers Move Into the House Before Closing?

buyers move into house before closing

Whether to let buyers move into the house before closing depends on sellers’ tolerance for risk.

Do you think it’s a good idea to let buyers move into the house before closing? Is there ever a good time or reason to give home buyers early possession of a home? I suppose the opinion greatly depends on which side of the fence you sit. If you’re a buyer, absolutely, you may develop an unexpected need for early possession right away, especially if you have to move out of your home before the closing of your new home. You don’t see anything wrong with it.

Hey, I’ve been there. I recall moving out of an apartment in Edina, a suburb of Minneapolis, the last apartment I ever lived in 25 years ago, and buying a home via a land contract of sale by the lakes in south Minneapolis. Went to closing, signed all of the documents, deposited funds and went home to finish packing. The sellers suddenly developed seller’s remorse and refused to sign closing documents. I sent a letter demanding they perform in accordance with the purchase contract, and I moved into the house anyway, without their permission.

This is not something I recommend. This is actually called trespassing. It is against the law. In my case, it worked, and the sellers signed. But it could have backfired. Just sayin’. Don’t you do this.

Yet, in an escrow that closed yesterday for a home in Antelope, the buyer’s agent asked for permission to let the buyers move into the house before closing. Their lender told them the transaction would close on Wednesday. Nobody checked with escrow, though. We had a last-minute glitch because M&T Bank had abruptly transferred the mortgage to trustee lawyers to begin foreclosure proceedings, even though the bank knew we were scheduled to close. That meant we were required to get an updated beneficiary demand from the trustee lawyers, and they could not possibly turn around that request in fewer than two days.

This is one of the problems with our lending institutions. So many banks tend to operate with internal systems and departments that do not communicate with each other. It’s like they keep separate files in each department, and the computer software systems can’t track a loan throughout the bank. Crazy to imagine that banks are that disorganized and screwed up but they are. I see it first hand all of the time, especially with short sales.

Can buyers move into the house before closing? I advised the sellers against it, but then laid out the pros and let them decide. After all, the buyers did pay for and complete all of the pest work prior to closing. The buyers also paid out-of-pocket to have the carpeting professionally shampooed. Their money had been deposited into escrow. They had signed all documents. But there was still a risk, and the sellers said, sorry, no. Sellers’ call.

When we were in a position to close 2 days later, the buyer’s agent sent an invoice from the movers for unpacking and repacking the truck. The buyers asked the sellers to reimburse them for that additional expense. I know what you’re thinking. We thought the same thing. People never cease to amaze. Further, that action solidified the decision not to let the buyers move into the house before closing. No regrets there.

Closing a Sacramento Escrow and Finding a Rental in November

finding a rental

Finding a rental in Sacramento is not easy in November or December.

In any real estate transaction in Sacramento, getting occupants out of the property so the buyer can take possession at closing is often a juggling act. Buyer possession can cause difficulty because stuff can change during escrow and the sellers might have no place to move, despite their best intentions. This time of year, it’s even more difficult. In talking with a seller yesterday about her brother moving out of a home that is in escrow right now, I suggested that he might be better off trying to find a rental NOW that is available on November 1 and negotiating with the owner to let him move in on November 15th, which is a few days before our closing date.

Because if he waits until November to start looking, most of the available rentals will be ready for occupancy on December 1, and that is too late. Not only that, but the number of rentals dwindles this time of year. Few people want to move over the holidays, so there are fewer rentals becoming vacant. Even if he has to pay for November 1, he’s better off than having no place at all to move. Well, there is always a Motel 6 somewhere, I suppose.

For Sacramento sellers who are leaving the state, it’s no issue to close in November or December, but for everybody else who is not buying a replacement home, finding a rental in November is radically difficult. The time to think about that issue is before November, like right now.

To alleviate this potential difficultly, I comb through my listings on a regular basis to determine if any of my sellers will have a problem finding a rental or just where they are planning to move. One seller is headed off to Texas and already has a place. Another is moving in with family. Three others live out of state. And yet another is doing a short sale and, fortunately for that family, many of the short lenders now allow a rent-back; whereas in the past arm’s length agreements used to prohibit them. Now, many lenders OK it for a minimum time period of up to 90 days.  This is useful information for some agents who are unaware of this change in policy.

But for this one guy with limited vision and even fewer resources, I imagine it will be a struggle. The fact that remains is a smart Sacramento Realtor will make sure her clients have some place to go. Especially if it means trying to find a rental in November or December in Sacramento. I hope my seller will be able to assist her brother in finding a rental. If not, there are options such as putting stuff into a storage unit and checking out Extended Stay.

When Does a Home Buyer get Possession?

business, eco, real estate and office concept - businessman and businesswoman holding white paper hoNew real estate agents have it kinda tough in a market where they are supposed to know what they don’t know, especially when it comes to the final walkthrough for the buyer. The problem seems to be that some think it’s a time for the buyer to conduct a final inspection, which it is not. I’m not sure where they get that idea, but probably from the same place that other bad ideas come from, the land of assumption. To get to the land of assumption, you’ve first got to cross the river of confusion and hope you don’t have to navigate blindfolded at high tide.

I wish there was some sort of handbook, filled with mistakes that rookie agents make, so we could buy this book and gift it to them, but life seems to do a pretty darned good job of preparing them for mistakes through the gift of consequences. It’s a good way for people to remember mistakes and not make them again. Although it can be painful.

Things are not always as logical as one might assume. For example, for some reason, a buyer’s agent thought a home would be vacant for the final walkthrough. The agent believed it would be completely void of personal belongings, including said person. This information was conveyed to the buyer as a matter of fact when it was actually a matter of a big mistake. I suppose when it’s your first deal, you don’t necessarily think through every step or you believe things will happen a certain way, even when they happen a different way.

In times of confusion like this, it’s always a good idea to read the Residential Purchase Contact. Buyer possession is handled on page 4, in paragraph 9 under “Closing and Possession.” By default, the contract gives possession of the home to the buyer on the day of closing at 6 PM. It used to be 5 PM in the old contract but they changed it to 6 PM in the new version released last November. This means the seller retains possession of the property and can keep his or her personal items in the property up until 6 PM on the date it closes.

So. if you’re planning to do a final walkthrough that morning, guess what? The seller may still be living in the home and still in the process of moving out. If that is unacceptable to the buyer, the time to address this is prior to closing, say around the time the contract is presented for acceptance or any time after that, prior to the date of closing. One does not wait until the day it is supposed to close escrow and then decide to ask the seller to vacate the premises earlier. That’s poor planning and likely to backfire.

But that’s why buyers want to hire an experienced agent to help. Buyers deserve an agent who understands buyer possession and can arrange for possession to be delivered in the manner the buyer desires.

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