Empower your business with airSlate SignNow's solution for closing the sell in legal agreements

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hi john goodman here i am here to talk to you about post-closing occupancy agreements so let me give you two different scenarios we're talking about how to protect your buyers or how to manage the risk for your buyers who allow the sellers to remain in the property after the buyer closes in on the on the purchase of the property we're talking about seller lease backs so two different scenarios one scenario is is your buyer closes on a transaction at the end of june the seller has a post-closing lease back post-closing occupancy agreement is what we tend to call them in colorado to keep the property until the end of july your buyer visits the property at the end of july and discovers one scenario that the seller of the property has trashed the property the property is in what much worse condition than the buyer expected much worse condition it was in than it was in when the buyer did the walk through just before closing on the purchase of the property another variation on the scenario is the buyer is ready to take possession of the property at the end of july and the seller won't give up possession of the property you can imagine that happening for all sorts of reasons we are called we are recording this video not after the end of the pandemic but uh post vaccines uh but you can imagine uh the seller being uh sick or having uh having covet or being sick for some other reason not wanting to move because of that the seller might not have their act together we are recording this at a time where it's very hard to hire anybody to do anything uh maybe the seller doesn't have their movers lined up uh maybe the uh seller is just a procrastinator who knows they're not moving your buyer client is in a very vulnerable uh situation a very vulnerable position in those situations and there aren't any easy solutions to those situations um how do how do landlords how do buyers manage those risks through things like large security deposits uh another way is through insurance very making sure that the buyers insurance protects against as many of those risks as possible and also by being lawyered up but the short of it is is possession is nine tenths of the law it's very difficult to deal with the tardy turnover of possession by the seller and the property condition uh trashing out of the property might require a lawsuit from the buyer as landlord against the seller as tenant now the reason i set the stage for that is because that allows that leads some brokers to conclude well when i represent buyers i always want my buyer to take possession of the property at closing i do not want this seller to remain in possession of the property and have all this time to mess around with the condition of the property well of course all other things being equal it is better for tenants to take possession of the property at closing however all other things are not equal we are recording this video at a time of extraordinarily low inventory lots of buyers chasing very few properties to sell sellers having the ability to be picky and choosing amongst 7 8 9 13 20 offers and one of the ways a buyer can make their offer more attractive is by giving the seller flexibility and letting the seller allowing the seller to remain in possession of the property post-closing might be what it takes for your buyer to get the deal a second concept about the risk management is is that these problems that i've just described the property condition problem and the risk of a tardy turnover of possession by the seller is not a problem that is eliminated when your buyer has a contract that allows the buyer to take possession at closing these things can happen when your buyer is supposed to get possession at closing you can go to the walk through just before closing and see that there is no way in heck that the seller is going to be out in time you can go to the walk through just prior to closing and see that the seller has trashed the property or that a snow storm has broken branches and caused the tree to fall down now it is true that if these problems are discovered prior to closing that your buyer has more leverage at that stage at least in theory because at that stage your seller the seller might be in default under the contract and the buyer may have the leverage not to close however that leverage not to close is not powerful in all situations for example uh the the ability not to close does not help the buyer very much in in an increasing interest rate market because if you're looking at a closing that is set to close on this date and your buyer does not close on that date it is possible that your buyer will lose out on a favorable interest rate and if the buyer has to close later the buyer will have a higher interest rate later another thing is is that the ability does not the ability to to not close does not help the buyer in the situation where the seller is not turning over possession at the time of closing and your buyer will be made homeless uh by not closing it does not help deal with that situation so i bring those uh things up not to be depressing i bring these things up to say that that while post-closing occupancy agreements do enhance risk for buyers they might not enhance risk for buyers more than the alternative as much they may not enhance the risk to buyers that much more than the alternative of getting possession at closing it depends upon the buyer how big a significant that delta is the the other thing uh the other reason uh i uh point this out is that um it's not malpractice to allow your buyers to agree to post-closing occupancy agreements because this is what a buyer might need to do to win the competition your job is to make sure that the buyer understands this risk and i will not so humbly suggest that sending the buyer a link to watch this video is a good way of informing the buyer of the risks and advantages associated with post-closing occupancy agreements all right that's all i got for you today remember it's a dangerous world be careful out there you