Post-Possession

Often when you’re buying a property, you’re also selling one.  For many people, this creates a stressful moment when you’re selling your biggest single asset and simultaneously buying your new biggest asset.  A stress sandwich, if you will….

What if you need the proceeds from your sale to fund the purchase? Said differently, what if you don’t have half a million dollars laying around to buy the new house?

If this is your situation….don’t worry! You’re not alone.

Your lawyer will often be able to negotiate a “post-possession” agreement.  This means you can get the proceeds from your sale, then (essentially) rent back your old home from the new owners for a few days.  The “rent” will typically be the per diem (daily) mortgage, maintenance, taxes, and insurance.  So, if the buyer will be paying $6,100 a month for all this stuff when they take possession, your post-possession per diem (per day) might be $200.   This would mean if you stay a week past closing, you owe $1,400 extra dollars.

This is typically handled through an escrow (your lawyer holds a few thousand dollars until you vacate and settle up).

Sometimes, the buyer will want an escalation that effectively penalizes the seller for staying too long.  After all, they bought the house because they want to live there (or flip it!).  You might see a $200/day per diem for days 1-7, then $400 for days 8-14, then $800 for days 15-21.

All of this is negotiable.  If you expect to need a “post-possession” agreement, you should discuss this with your broker before signing a binder.  You should also make sure your lawyer knows about this in your first conversation.

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