Use and Occupancy Agreements
If you are buying or selling a house, there may be various complications that delay the actual sale. For example, when a buyer is obtaining financing, the loan process includes multiple steps that need to be taken so that the lender can eventually provide consent. One way to solve this type of issue is a use and occupancy agreement. At Pulgini & Norton, our Boston real estate lawyers may be able to negotiate and draft such an agreement to provide a framework so that you can use and live in a house before the closing in situations in which there are complications related to financing or closing.Use and Occupancy Agreements
The purpose of a use and occupancy agreement is to give someone other than the owner a license to use the premises. It is structured to permit a prospective buyer to be removed from the premises if financing or another complication holds up a sale. However, your agreement must explicitly state that it is not a landlord-tenant agreement, or it will be treated as such under Massachusetts law.
Suppose that, for example, someone is selling his home to a buyer who is relocating from another state to accept a job offer in Boston. The lender provided initial approval so that the buyer may buy the home, and the buyer is going through the steps to provide a loan. The paperwork is complete, and the closing date is imminent. The buyer sells her home in Texas and moves into a temporary rental property with the intention of moving into the seller's house after the closing. However, at the last minute, the lender does not get the appropriate information, and the closing is moved one month out. The buyer cannot rent the same unit any longer and needs a place to stay while working at her new job.
A seller may be worried about letting the buyer live in the house while waiting for the loan to come through. It makes sense to facilitate the sale by allowing the buyer to move in early, but there is a possibility that everything that can go wrong will, in which case, you might be faced with the difficult situation of getting the buyer out. The law provides protections for renters that must be followed. In this case, a use and occupancy agreement might provide the buyer with an option that provides protections for both the buyer and the seller without subjecting the seller to the rules that landlords face.
With a clear use and occupancy agreement, it is easier for the seller to agree to the buyer occupying the residence before the closing. It also makes it easier for the seller to remove the buyer if the financing does not come through. The agreement needs to be clearly drafted because otherwise the seller may need to go through legal proceedings that take months in order to remove the buyer. When the agreement specifies that a buyer needs to pay all of the legal fees if they need to be evicted, there is an incentive for the buyer to cooperate and avoid creating trouble for the seller.
Additionally, the buyer must usually pay something to occupy the premises early. Sometimes this sum is based on the mortgage for the house, but it may also be based on market rental rates of comparable properties.
Another point that the language must address is what happens if the property that the seller leaves in the house is damaged, or if the land itself is damaged. A seller may wish to have indemnification language so that the buyer is responsible if, for example, one of their guests gets injured in a slip and fall during the time that they are on the property.Contact a Boston Attorney for Your Real Estate Needs
Real estate transactions may be extremely complex. It is important to consult an attorney about the various contingencies necessary to build into your agreement when buying or selling a home. Both parties may have legitimate concerns related to a buyer's ability to obtain financing and other matters. At Pulgini & Norton, our experienced Boston attorneys can advise you on the transaction and draft an appropriate use and occupancy agreement if needed. Our firm handles real estate transactions in Weymouth, Newton, and Braintree, among other Massachusetts cities. For a consultation with a property transaction lawyer, contact us online or at 781-843-2200.