Understanding the Possession Date for Homebuyers

When Can a Homebuyer Move In?

Happy couple in new home laying on a group of couch cushions among moving boxes.
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When a home buyer picks a house to purchase, the transaction process can be lengthy and somewhat complicated. The buyer possession date is often a point of confusion. Some of it has to do with when the seller is vacating, but not always. Without fail, it's the single biggest headache in many real estate transactions and the number one problem that can rear its head midway through the process when needs or circumstances might change. Sometimes, unfortunately, the date of buyer possession was never clearly established in the first place. This is when each of the parties, buyers, and sellers, may develop a contradictory expectation of possession.

The Buyer Possession Date at Closing

Bear in mind that a real estate closing doesn't always coincide with the recording of the deed, because in some parts of the country, counties are weeks behind in recording deeds. In those situations, closing happens when the money changes hands and the deed is drawn and all conditions of the contract have been met. Where I work in Sacramento, California, buyers don't get the keys until the title company has confirmed the deed has been recorded and conveyed that confirmation.

Customary Buyer Possession Dates

Local custom will dictate how the buyer asks for possession, but possession is typically an issue agreed upon at purchase contract acceptance. It's not unusual for a buyer to receive keys on the day the transaction closes. In some parts of the country, buyers give the sellers a day or two after closing to move. Sometimes sellers rent back from buyers. Whatever you agree to, make sure it's in writing.

How Market Conditions Can Influence Buyer Possession Dates

  • In seller's markets, buyers will often give sellers several days to move at no consideration to the buyer. This is to gain an edge in the event the seller receives multiple offers.
  • In buyer's markets, buyers will generally insist upon occupancy at closing and have been known to refuse to close if the property isn't going to be vacant at closing.
  • In neutral markets, possession is typically upon closing.

Early Buyer Possession

As a general rule, giving buyers early possession is frowned upon because too many things can go wrong at the last minute. Eviction is not always easy nor inexpensive. For that reason, professionals advise that sellers and buyers execute some type of rental agreement.

Seller Rent-backs Retain Possession

Buyers want sellers to pay a sum equal to their mortgage payment, plus insurance and taxes. That amount is often a lot more than the seller's original mortgage payment. Whatever amount is agreed upon, put it in writing, and execute a rental agreement to protect all parties. The amount is negotiable and there is no real reason it needs to be based on the buyer's PITI. An argument exists that the rental amount should be based on average rental amounts for the area.

Instead of specifying possession on a certain date, it's smarter to write contracts that give possession either on "closing" or X days before or X days after, not a specific date.

Possession Delays Due to Loan Funding Conditions

Even the best-laid plans run afoul at times. Your contract can spell out precisely when occupancy is permitted, yet the transaction might not close on time. Common reasons involve the loan. By the time the loan documents are signed and the lender reviews them, the underwriter might call for a loan condition to be satisfied before funding. The satisfaction of that condition can easily delay the loan.

A recent seller from Carmichael, CA, found that she could not find any movers to work on a holiday, the day she was supposed to vacate her home of 40 years. The buyers refused to give the seller an extra day to move out, claiming the seller should have made arrangements far in advance of her move-out day. Reluctantly, and at an additional expense, the seller changed her moving day to meet the buyers' demands.

At the last minute, the lender called for a loan condition and refused to fund the loan until the condition was met. Meeting the condition delayed the closing by 2 days, but the buyers wanted the keys to the home on the day it was originally scheduled to close. They didn't want to physically move in. They wanted to shampoo the carpet. If you were the seller who had moved out and left the home vacant, under these conditions, would you have given the keys to these buyers?

The seller, when informed that keys should not be handed to a buyer until a transaction closes, decided to withhold the keys. She was within her rights. Why risk a problem?

At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.