What Is a Pre-Closing Occupancy Agreement?
A pre-closing occupancy agreement—sometimes called an early possession agreement—allows a buyer to move into a property before the sale officially closes. This short-term arrangement defines how long the buyer may stay, what rent or deposit is required, and who is responsible for insurance, maintenance, and utilities during the occupancy period.
How a Pre-Closing Occupancy Agreement Works
Normally, a buyer takes possession only after closing. But when circumstances require early move-in—such as relocation, a lease ending, or scheduling delays—both parties can sign a pre-closing occupancy agreement. It typically specifies:
- The start date for early possession and when it ends if closing fails.
- The daily or monthly rent to be paid to the seller before closing.
- Responsibility for utilities, maintenance, and insurance coverage.
- Conditions if closing is delayed or financing is denied.
Until the sale closes, the seller retains legal ownership while the buyer only has temporary occupancy—not equitable interest.
Risks and Protections for FSBO Sellers
Allowing a buyer to occupy the property before closing can carry risks for FSBO sellers. If the transaction falls through, the seller may face challenges regaining possession or repairing damages. To stay protected, the agreement should require:
- Proof of insurance naming the seller as additional insured.
- Non-refundable deposit or escrow hold-back for potential damages.
- A firm vacate date if the sale doesn’t close on time.
When managed properly, early occupancy can be convenient for both parties. Once the contract moves from under contract to closing, ownership transfers and the occupancy agreement ends.
You can also compare this with a post-closing occupancy agreement, which lets the seller remain after closing instead of before.
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