Some people are not aware of what a post-occupancy agreement is in real estate since not all states use them. In Colorado, a post-occupancy agreement works like this:
Let’s say a seller and buyer agree to close the transaction August 27th, but the buyer gives the seller three days to move out after closing. The three days after closing is the post-occupancy and as such, an agreement in writing needs to be executed with the contract. This two-page agreement spells out that the sellers will get renters insurance for the three days they are in the home. It also addresses if there will be rent charged to the sellers, if a security deposit will be required, who cover the costs of the utilities, and what happens in case of damage to the home.
At this point, you may be wondering why anyone would want to go through all this hassle for just three days. Why wouldn’t the sellers just move out on the day of closing? The main reason for the post-occupancy agreement is because a seller may have their entire home and existence packed up in the moving truck in the driveway. Now let’s say you do the closing only to find out that there is no closing because the buyer did not get their loan, and they have to forfeit the house. Yes, you get to keep their earnest money, but now you have to unpack the truck, pay the movers, and move back into your home. With a post-occupancy agreement, sellers can have the assurance of their home closing before they even pack a box.
While it’s your right in Colorado to use and exercise a post-occupancy agreement, we strongly suggest that you do not. In the past year, we have seen serious issues in and around post occupancy agreements on the rise. In fact, just in the last month, I mediated four post occupancy disputes. Why would I have to mediate a post-occupancy agreement when everything is already spelled out? Because there are more situations in life than the agreement can cover and just when you think that the odd, weird, wild, never-in-a-million-years situation wouldn’t happen to you… it does. I could go on for pages with stories that you couldn’t possibly write of things gone wrong between buyers and sellers during a post-occupancy agreement. Like the time, the sprinkler system busted during a post oc and flooded the basement, the fire in the kitchen, or the renters who refused to leave. How about when the renters wanted to dispute the security deposit, who handles that? Rental agreements, security deposits, and the like are outside the normal license responsibilities of a Realtor. As I said, I could go on and on with the bad situations, one after another, but here is the one takeaway you need to know… IF IT ALL POSSIBLE, DON’T EXERCISE A POST OCCUPANCY AGREEMENT. It just opens the door for all kinds of bad things to happen.
Dan Polimino is a Broker/Owner with the Colorado Dream House Team, Keller Williams Realty DTC. Contact the Colorado Dream House Team at 720-446-6325, Follow us on Twitter, Like us on Facebook, Watch us on YouTube