A Brief Introduction of Post Occupancy Agreement
A relationship between a buyer and a seller can be much more complicated than just signing the house settlement agreement. Sometimes, the seller sells the house, and he moves on to his new house, however, the other times, the seller doesn’t get his new house on time. In such a circumstance, he needs to live in his old house on rent for some time. The buyer has no choice but to accommodate the request of the seller.
If the buyer decides to rent the house to the seller for one month to 3 days after closing the deal or settling the deal, they both get into an agreement known as Post Occupancy Agreement. This agreement protects both parties and ensures that the right terms and conditions for such a situation are well-documented.
Other names for the Post Occupancy Agreement are Post Closing Occupancy Agreement, Post Settlement Occupancy Agreement, and Post Closing Possession Agreement.
Who Takes the Post Occupancy Agreement?
A Post Occupancy Agreement Form is signed between a buyer and a seller. Both parties can choose to add the names of mediators or arbitrators if they want. However, it is suggested that they take the help of a real estate attorney to understand the terms, clauses, and responsibilities. The agreement protects both parties and ensures there are no disputes and confusion later.
Purpose of the Post Occupancy Agreement
As discussed above, the Post Occupancy Agreement Form is needed when the seller is ready to leave the house but due to unforeseeable situations, such as his new house not being ready, or the unavailability of pickup vans.
The agreement lists down all the terms of such a procedure in a very clear way.
Here are some pointwise reasons to sign this agreement –
- The seller’s new house is not available on time.
- The seller is unable to move his luggage into his new house on time because of the unavailability of logistics.
- It ensures a safe post-settlement occupancy for the seller.
- Reduces the risk of losing the house.
- Ensures there are no disputes and confusion.
- Protects both parties.
- Spells out the responsibilities of both parties.
Contents of the Post Occupancy Agreement
A post closing occupancy agreement will have the basic details of both parties, which include names, addresses, phone numbers, etc.
- All the details should be specified in the agreement very adequately. Since the seller will be living in the house on rent, the agreement should have all the details related to it.
- It should have the term or period of the rental specified.
- Further, it will have the details of the amount of rent to be paid per day or per month. If there is any security deposit involved, the agreement must mention it. Security deposit details can be extremely tricky.
- The contract should also include the permissible time that the seller can stay in the house until handover. It should include the details of transition and penalties for non-compliance
- The contract should assign responsibilities of property maintenance and condition for the time the seller is in the house.
- Payment for utilities and liability for payment should be considered. It must be noted that no provision in the contract may be in contravention to any transfer of property acts.
How to Draft the Post Occupancy Agreement?
To draft the post closing occupancy agreement, both parties must discuss the details in person. The seller must make it clear to the buyer about such scope, and he must also tell the buyer about situations in which he might need the house on rent. A healthy and honest conversation between both parties ensures everything goes right.
Both parties have their reasons to sign this agreement. For the buyer, it may seem risky, but without it, he could lose a good house, to begin with.
Once both parties discuss with each other, the agreement must be drafted. They can also take the help of a real estate attorney. Parties can also negotiate on various things such as
- The rent payable, and the rent cycle along with the mode of payment.
- Any security deposit that the seller must pay during his stay on the property.
- Any additional costs of maintenance that the seller has to pay for any utilities on the property.
- The details of the rights of access during the time the seller has occupied the property
- Any loss or damage caused to the property at the time the seller resides there should be covered by which party is important as well. Indemnification of loss and insurance against risk are important considerations.
Negotiations are one of the most important aspects of this agreement. It is through negotiation that the seller manages to convince the buyer to give his brand new house on rent. Other negotiations involve rent cost, the term of the rent, maintenance cost, responsibilities of each party, etc.
For negotiations, both parties have to meet in person and discuss all the terms and responsibilities. It may seem like a business deal at first, but if you create a healthy relationship and ensure that both parties are on friendly terms, it can get easier to implement the agreement successfully.
Benefits & Drawbacks of the Post Occupancy Agreement
A well-drafted post closing occupancy agreement benefits both the buyer and seller. However, if the agreement is not drafted, keeping various points in mind, it can turn risky.
Here are a few advantages of this agreement –
- It ensures all responsibilities and obligations are mentioned in one document.
- It lets the seller live in his house for some more time.
- It allows some time for the seller.
- It ensures there are no disputes and confusion at a later stage.
- It allows the seller doesn’t face any trouble after selling his house.
- It specifies the rights of both parties during the rent period.
Here are a few disadvantages of the agreement –
- The buyer doesn’t get his new house even after the settlement.
- It can delay the shifting for the buyer.
What Happens in Case of Violation?
Both parties are advised to follow the terms and conditions of the agreement. In case of any confusion or misunderstanding, they should refer to the agreement. It is always good to draft the agreement keeping all risks in mind.
Parties can also add the names of mediators in the agreement who can solve any conflict(1). However, in case, none of these work, parties within their rights can approach the court.
Simple Occupancy Agreement or Post Occupancy Agreement is a very crucial piece of document that requires very clear language. It should be drafted with full precaution and care.
There are many Post Closing Occupancy Agreement templates available online. However, you must choose wisely. You must also make sure that there are healthy discussions between both parties.