Buying a new home is a complicated process, especially if you have to vacate your previous home before the transaction is finalized. In that situation, you may be able to work out a use and occupancy agreement with the seller of your new home. This will allow you to stay in your future home, while the real estate transaction is completed. However, before you enter into such an agreement, it’s important to understand how it works.
You Are Not a Tenant
This is an important point to remember. Many people equate a use and occupancy agreement with a lease, but the two are very different documents. One thing to bear in mind is that the owner of the property isn’t held to the same obligations as a landlord as far as maintaining the property in livable conditions. Essentially, you agree to use the property “as is,” until the transaction is complete.
Each Use and Occupancy Agreement is Unique
The reasons you might need a use and occupancy or U&O agreement vary. A change in the settlement date or a need to vacate your previous home might be just a couple reasons this can come in handy. Additionally, it’s up to the seller to approve a U&O. The seller may just permit the U&O without any contingencies, or he might require that you pay rent for the time you’ll be using the property under his ownership. Either way, it’s within his right to approve or deny the U&O request.
Get it in Writing
When the buyer and seller do agree to a U&O, the first thing they will want to do is put it in writing. This means drafting a document that outlines the details of the agreement, such as the length of time the individual will be permitted to use and occupy the property. If rental fees are to be paid, this should be detailed in the document as well. You may want to have your attorney look the document over to ensure everything has been addressed.
Obtaining a use and occupancy agreement can help you out of a tight spot. It can provide you with a place to live, while your real estate transaction is finalized. However, you should be prepared to pay a rental fee for this opportunity, depending on the specific circumstances of the arrangement. As long as you understand and abide by the terms, a U&O can help ease your transition into your new home.