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Ask Phyllis!

Posted by on Aug 4th, 2011 and filed under Between Friends. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

Questions About Today’s Real Estate?

Phyllis Harb is a Realtor with Prudential California Realty. She may be contacted at (818) 790-7325 or by email AskPhyllis@Realtorharb.com.

Ask Phyllis!

Is it okay to allow the buyer early possession to the property?

My vacant home is in escrow. The buyer had his inspection and we worked out those details. The buyer has asked my Realtor® if he can move in early because the home he is living in has been sold and he doesn’t want to move twice. My Realtor® is a friend’s daughter and not very experienced; she doesn’t foresee a problem. Any input?
Reluctant Landlord

Dear Reluctant,
Is it rude for me to scold you for hiring someone you admit is inexperienced to handle one of your greatest assets? At the very least, your Realtor® should consult with her manager or an office mentor.

Answer these questions: What do you have to gain by being a kind soul? What do you have to lose?

I am not a real estate attorney, but in my experience if you agree to allow the buyer early access you should consider the following terms prior to early possession:

1) There must be a written rental agreement between you and the buyer; the buyer should pay fair market rent until closing.

2) The buyer must remove all contingencies (in writing).

3) The buyer’s lender must provide you with exact and detailed loan status (in writing).

4) You and the buyer need to agree in writing that escrow must close by a certain date. The buyer’s deposit (should be 3% or it should be increased) must be released to you and the buyer must agree in writing that in the event escrow does not close for any reason other than your default the deposit is yours to retain as liquidated damages.

If you agree to allow the buyer early possession, you are doing the buyer a favor, not the other way around. You need to protect yourself. If you don’t close escrow and the buyer doesn’t move, you will need to hire an attorney and evict your tenant. You should consult with an attorney (real estate or eviction specialist) to determine if there is a legal document that the buyer could sign prior to move in, which would speed the eviction process if you need to go that route.

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