URGENT QUESTION:Seller Clause "Deliver Keys 3 Days after Closing"
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China, ME · Member since 2014 · 3k+ posts · 4k+ votes
7y@Annie Li This is a BIG red flag.
Your contract should state that the property is to be delivered vacant and broom-clean. Keys, alarm codes etc should be tendered at closing.
If the sellers intend to have access to the property after closing, you need to execute a "use & occupancy" agreement. And you need to be prepared to evict them if they stay 10 seconds longer than agreed to. They should be paying a per diem, including your costs for 3 days of taxes, insurance and utilities. The per diem should skyrocket on day 4 and beyond - like by a factor of 5 or more. You want to make it very painful for them to stay beyond day 3.
There's the issue of damage to the property - banging into walls while moving out. Breaking a railing while passing a sofa over it. Intentional damage by the sellers or even a vandal in the mean time.
If you allow them to stay beyond closing, you need to hold back funds at closing, sufficient to cover eviction, cleaning and for any damage that might happen - and you need to do a walk-through with a video within a few hours of closing to document the condition.
Again, this is a very bad idea. I hope you're represented by an agent or attorney.
25 Replies
- Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes7y
How will you be covered if they damage the property removing whatever is in there? What will it cost you if they do not remove anything after closing and you have to dispose of it? What if someone is hurt removing this stuff while you own it? What if there’s hidden damage/mold behind the stuff that hasn’t been moved?
All I see is downside for you. I’d want it empty. I’d be willing to give up $200 to pay for a So]forage unit for the seller if they are that cash strapped. I want to walk through an empty building a few hours before closing. Especially after this request.
I didn’t even think of squatters moving in, or a false lease showing up.
- China, ME · Member since 2014 · 3k+ posts · 4k+ votes7y
@Annie Li This is a BIG red flag.
Your contract should state that the property is to be delivered vacant and broom-clean. Keys, alarm codes etc should be tendered at closing.
If the sellers intend to have access to the property after closing, you need to execute a "use & occupancy" agreement. And you need to be prepared to evict them if they stay 10 seconds longer than agreed to. They should be paying a per diem, including your costs for 3 days of taxes, insurance and utilities. The per diem should skyrocket on day 4 and beyond - like by a factor of 5 or more. You want to make it very painful for them to stay beyond day 3.
There's the issue of damage to the property - banging into walls while moving out. Breaking a railing while passing a sofa over it. Intentional damage by the sellers or even a vandal in the mean time.
If you allow them to stay beyond closing, you need to hold back funds at closing, sufficient to cover eviction, cleaning and for any damage that might happen - and you need to do a walk-through with a video within a few hours of closing to document the condition.
Again, this is a very bad idea. I hope you're represented by an agent or attorney.
- Real Estate Investor · FL · Member since 2011 · 586 posts · 360 votes7y
Did they give you a reason why they want three days after closing? My only guess would be they need the funds in order to move. You could always have an escrow holdback for a large enough amount where the risk makes it worth it to you, but if there is a dispute that money could be held up for quite a while and a lot would just go towards attorneys. I like @Bill B. idea of paying for storage for them and then you getting reimbursed at closing when they are getting their funds.
I've had this situation happen before where the seller had no money for a new place to live so we held back $5k that was to be released once he vacated the premises. The attorneys wrote up the agreement that made me comfortable and he ended up being out within a couple of weeks. I was also getting a very very good deal on the property so even if I had to evict, I'd still be happy (he couldn't trash the place any more than what it already was).
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
we dont let them move in early @Bill B. or keep possession @Charlie MacPherson unless we have a big wad of dough in our possession at close.. like 10 to 20k..
- China, ME · Member since 2014 · 3k+ posts · 4k+ votes7y
@Jay Hinrichs Agreed. It's important to make it HURT if the seller overstays, leaves the place a mess or damages the property. There has to be enough of a holdback of funds at closing to cover eviction, cleaning and any other contingency you can think of.
I recently helped another BPer to buy an SFR here in Plymouth. The deal was right and the market is extremely tight, so we agreed to a 7 day post-closing stay. There was literally nothing else in that price range, so we had to bend a bit.
The crazy lady (seller) stayed 21 days. She showed up to closing without the slightest idea of where she would live next. We had a pretty good holdback and used every penny of it.
- Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes7y
Agreed, what’s the point of closing if you don’t take possession? Move closing 3 days so they deliver the house empty and clean.
I’d worry about them not leaving, leaving a mess, liability, insurance, etc.
100 reasons to not do it, and the only one reason to do it is to make their life easier!
- 7yAnnie LiRental Property Investor · La Puente, CA · Member since 2015 · 87 posts · 20 votesOP
Thanks to everyone for your prompt and insightful input.
Seller needs funds to buy another property to move into, that's why they can only vacant property after closing day. I don't really have a choice here because I'm in Los Angeles County where seller usually has more privilege than buyer.
Also, property is sold as is, so it makes no difference if I find mold or damaged walls when vacant that were covered by furniture on closing day.
I took everyone's advice and asked agent to add below clauses:
1. $10k to be held by escrow until property is vacant to cover possible eviction, cleaning or damages caused by moving;
2. Seller is responsible for taxes, insurance & utilities until property is vacant;
3. Seller shall pay $200/day after 3rd day of closing if property is not vacant by then;
4. After 10th day, eviction will be filed if property is not vacant by then.
I hope I didn't miss anything. Again, thank you all very much for your kind help.
- Los Angeles, CA · Member since 2018 · 326 posts · 279 votes7y
@Annie Li since you're in Los Angeles you'll definitely want to work with escrow on this and if the deal is good enough then obviously work with the seller.
In Los Angeles County the seller doesn't have more privilege than the buyer. You have much more leverage in a signed Purchase Agreement compared to the seller.
Depending on who the Seller is and what they're moving onto depends on how aggressive I am with this particular amendment. If my clients don't have to be in the house immediately then I'll work with them but make sure the additional clauses are added to the contract.
- Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes7y
@Annie Li Just close whenever the seller is ready. Not worth the risk. Wait the three days.
- China, ME · Member since 2014 · 3k+ posts · 4k+ votes7y
@Annie Li I'd be a lot more aggressive with the per diem. Something like $500/day for days 1 to 3 and $2,500 /day beyond that.
I'd also file eviction on day 4, not day 10.
The as-is provision applies to the condition in which it was shown. Any additional damage should be the responsibility of the seller. In other words, that as-is provision doesn't mean that the seller can trash the place on the way out.
This can go so wrong in so many ways that it's frightening. I really hope that it works out for you!
- Flipper/Rehabber · Portland, OR · Member since 2014 · 120 posts · 80 votes7y
@Annie Li I think you're getting really good advice but I want to add one thing..... be strong in the verbiage. And be precise. 10K escrow holdback to be released only upon buyer inspection that the property has been delivered in broom swept and vacant condition with no additional damages since initial inspection of property. Funds not to be released until buyer delivers in writing to escrow unilateral acknowledgment of acceptable walkthrough within X days of vacancy.
You get the point. Burden of proof on them for delivery, and only you can accept it and release funds.
Also, I would consult an eviction attorney and see if you can get a stipulated judgment for the eviction and make that a requirement as well. Then file the eviction at day 4 and by the time the hearing comes they will either be out or have agreed to a judgment against them. It doesn't work in every state but even if it doesn't, a good attorney can help you use it to avoid the eviction.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes7y
Originally posted by @Annie Li:
Thanks to everyone for your prompt and insightful input.
Seller needs funds to buy another property to move into, that's why they can only vacant property after closing day. I don't really have a choice here because I'm in Los Angeles County where seller usually has more privilege than buyer.
Also, property is sold as is, so it makes no difference if I find mold or damaged walls when vacant that were covered by furniture on closing day.
I took everyone's advice and asked agent to add below clauses:
1. $10k to be held by escrow until property is vacant to cover possible eviction, cleaning or damages caused by moving;
2. Seller is responsible for taxes, insurance & utilities until property is vacant;
3. Seller shall pay $200/day after 3rd day of closing if property is not vacant by then;
4. After 10th day, eviction will be filed if property is not vacant by then.
I hope I didn't miss anything. Again, thank you all very much for your kind help.
Have them sign a 3 day lease covering the period. It may sound crazy but eviction is much easier if you have a lease. I am not sure that putting eviction clauses in a purchase agreement even makes sense. That would be handled under a lease.
I actually sold my previous house and lived in it for two months after closing. We sold the house faster than expected. The buyer didn't want to delay closing, so they leased it to us for $0 for two months.
- 7yAnnie LiRental Property Investor · La Puente, CA · Member since 2015 · 87 posts · 20 votesOP
Wow! BP is truly an amazing community. I'm surprised and touched by so many warm and helpful responses.
I'm still negotiating with seller, they basically declined on anything I proposed like escrow hold, daily rent, etc. and my agent (she is also the seller's agent) is not trying to negotiate for me, she just said she couldn't force seller to do this, and "Believe you are in good hands and everything will be set up to deliver keys as on contract. They are very reliable people and everyone here will do their best always acting in good faith" after I explained to her that it's under nobody's control if seller can't close on the other property as planned for any reason.
Even my agent's manager is not understanding the risks for me and said it's completely normal that seller does something like this and there is nothing to worry about.
I will update later if contract is signed or falls through.
- China, ME · Member since 2014 · 3k+ posts · 4k+ votes7y
@Annie Li Your agent's response stinks to high heaven and this is one of the problems with "dual agency", where the agent represents both sides. I'm assuming that fact was properly disclosed in advance. If it wasn't, that agent could be in big trouble.
You need to put your foot down. If your agent's manager isn't the managing broker for the agency, I'd get to that person ASAP. If not, I'd look at backing out of the deal.
Maybe things are different in CA, but I can assure you that here in Massachusetts, the seller staying for 3 days after closing without payment to and protection for the buyer is absolutely NOT normal.
By the way, if the seller is such a nice person, they should have nothing to fear from a holdback of funds at closing.
And the idea that you should be paying for RE taxes, homeowner's insurance and utilities when you don't yet have possession of the home is absurd on the face of it.
Maybe there's more to the story, but from what's presented here, it seems to me that you are not being well represented at all.
You might consider having an attorney or a sharp Realtor represent you. I think it would be money well spent, because this situation sounds borderline abusive and may be a breach of ethics.
- 7yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
If everything will be removed from the house, why do they need the keys for 3 days? This contradicts what you wrote later when you say they can only vacate the property after closing.
If you are using the seller's agent, tell them that you are getting your own agent. Their response to your request, as you said, shows that they are not worried about your interests. It costs you nothing to get your own agent when you are buying.
- 7yAnnie LiRental Property Investor · La Puente, CA · Member since 2015 · 87 posts · 20 votesOP
I still want to close the deal, so I offered to pay seller $500 on moving and storage costs so property can be vacant on closing day. Agent put “deliver keys on next day of recording” which she explained to be the same as “deliver keys on closing day” because closing occurred on next day of recording. It’s a little strange that she changed the wording from “closing” to “recording” in counter offer, I hope it’s true that “next day of recording” is equivalent to “same day of closing” in California.
I chose to use dual agent because seller’s agent is much more motivated to work with me to get the deal than using my own agent. I feel even though I have my own agent, his/her ultimate goal is to get commission which has no difference than the goal of seller’s agent. Furthermore, seller’s agent is usually offering rebate to buyer when being dual agent.
- 7yNed J.Pro MemberInvestor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
If the agent is so confident about everything going well, then they can have their commission held back until you get the property in your full possession, fully vacant and in the proper condition you agreed on....... let her $$ be on the line until everything is finished up correctly....
The dual agent gets paid no matter how bad it goes for you....they have zero skin in the game after the sale. Its amazing how easy it is for other people to risk someone else's $$...screw them....
Dual agents often suck..... when the agent started off as the seller agent, they are rarely going to protect the buyers interest as much as the seller. When you have your owner agent, at least they want to maintain a good standing with you for future business and referrals. Yes they are motivate for the sale....ALL agent are....but you hired them to work based on your interest....not the seller
And if the wording of "next day of recording" is "the same" as "keys on day of closing", then put in "keys same day as closing"...... I think the agent is playing word games with you to get what they want.... I'm not playing that game.....
I'm not letting ANYONE stay in MY house without some $$ to protect MY interests..... no deal....
- Rental Property Investor · Harrisburg, PA · Member since 2018 · 369 posts · 406 votes7y
GET YOUR SH!T OUT OF MY HOUSE. I SIGN, I GET TO HAVE THE KEYS AND YOU GET TO BE A SWIFTLY FADING MEMORY.
I don't care about your sob story, your hamster has leukemia, your job hunt isn't going well, yadda yadda yadda.
OUT.
But hey, I don't like or trust anybody, so you probably wouldn't want me along for support at closing unless you could cover my bail.
:)
- China, ME · Member since 2014 · 3k+ posts · 4k+ votes7y
@Annie Li Too late now, but going with the dual agent is a bad decision, and the idea that the seller's agent is more motivated than your own agent is just incorrect - aside of the fact that they are making both sides of the commission.
A buyer's agent has the advantage of being on your side, representing your best interests. Yes, both agents earn a commission - that's how we feed our families. The difference is in the kind of representation you get.
A sharp buyer's agent would never have let you pay $500 to get the seller to conform to the contract terms - or let you present an offer with the 3-day overstay, unless there was proper protection for you. The seller's agent is brushing that off as no big deal because they want that commission.
It appears to me that the dual agent is walking all over you and a sharp buyer's agent would have prevented that.
I hope it goes well, but without proper representation, I'm wondering what other items they snuck by you.
- Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes7y
Annie Li,
If you will be living there after the current owners move out, you need to make sure that your insurance company is ok with this . If you are living there, you will be getting a Homeowners policy and it may not allow for rental of the property.
- Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes7y
If you were buying a $20 cake at the local bakery, I’d agree that all this wording isn’t worth it. But you’re spending hundreds of thousands of $$ and you need to cover yourself because at the end of the day, no one else cares about your money.
It sounds like you’ve been very good to the seller - as long as they do everything as they said, they’ll get all their money.
But you need to protect yourself if they don’t.
Good luck! Don’t be afraid to walk away. No one else is going to close as quickly as you will.
- Flipper/Rehabber · hamilton nj · Member since 2019 · 24 posts · 9 votes7y
dont worry you will find another and better opportunity soon!!!!
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