Transfer of possession is a common problem between homebuyers and sellers. It can cause enormous frustration for one or both parties. The buyer may be anxious to get started making the home his or her own. The seller may have no other place to live while waiting for her own home purchase to close. These problems can be avoided with a little upfront planning.
This article will closely examine the process of taking possession of a new home. Many homebuyers misunderstand how it works, and thus fail to foresee the potential problems. We'll provide a few tips to help ensure the process goes as smoothly as possible.
Is Possession Transferred When The Deed Is Signed?
One of the most common misconceptions about transfer of possession is that it always occurs on the date of closing. The buyer believes he can begin moving into the home immediately after its title is conveyed to him from the seller. While this is normally the case, it is not so for every situation.
The real estate contract should specify a particular date on which the seller is expected to surrender the keys of the house to the buyer. As noted, this date is usually the same as the date on which title is transferred to the buyer. But sometimes, a later date is used as a condition of the transaction.
For example, the contract may specify that the seller has the right to remain in the home for three days following the transfer of title. If the homebuyer is unaware of this condition, and expects to move in on the day of closing, he may fail to make other living arrangements.
The most important thing to remember is that possession may not be transferred on the same date title of the home transfers. Confusion in this area can lead to serious problems.
Possession Based On The Strength Of The Market
Thus far, we have discussed the transfer of possession as occasionally occurring after the title transfers. But it's worth pointing out that this happens more commonly during a seller's market. When there are several potential homebuyers vying for the same property, the seller can essentially dictate the conditions of the sale. Because many of them are waiting to gain possession of other houses, they often specify a date several days after the title transfer.
During a buyer's market, the buyer can usually move in on the date of closing. The seller, lacking other potential buyers, has little choice but to accept these terms.
Avoiding Potential Problems
There are situations with regard to possession that can become problematic, even though they stem from good intentions. For example, suppose a seller has moved prior to closing the sale on his previous house. In other words, he no longer occupies it. Rather than making the buyer wait to move in until the date of closing, the seller agrees to let them do so early.
On the surface, this seems to present no problems since the seller does not occupy the home. However, keep in mind that real estate transactions can collapse at the last minute. If the purchase of the home is derailed, the seller may have difficulty evicting the buyer. For this reason, real estate experts strongly caution sellers against giving early possession to buyers.
When you buy a home, make sure you are aware of the date on which you can take possession of it. The date should be included in the contract. If you do not see it, insist that it is added.
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