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What is a Use and Occupancy Agreement?

On Behalf of | Mar 9, 2021 | Firm News

It can be incredibly stressful to buy and sell a house on the same day. So much goes into coordinating a closing, and making sure that the dates align with a second transaction can be a juggling act. Unfortunately, if a person needs to sell a home in order to purchase one, there are few alternatives. Even if an individual has enough liquid assets to make a down payment on a second house without selling their present one, their lender may not allow them to hold two mortgages at once, making it impossible to buy a home without selling first. The hassle of moving to a temporary location is not always reasonable or desirable either.

Sometimes, circumstances allow parties to engage in a workaround. If everyone who is a party to the transaction agrees, the Seller can remain in the property for an agreed amount of time after closing. Similarly, the Buyer may move into the property prior to closing if it is otherwise vacant. If the Buyer and Seller agree to allow this arrangement, they should enter into a use and occupancy agreement, which is a written agreement that addresses the concerns that both parties may have related to the use and occupancy of the premises by a party before, or after, their ownership of it.

A use and occupancy agreement should cover all contingencies, including, but not limited to: liability for damage, what happens if the occupant does not close or vacate in the agreed time period, responsibility for maintenance, payments involved, if any limits are placed on the use and occupancy, and what conditions must be met to allow the use and occupancy to begin. A good attorney is necessary to ensure that the parties’ contractual rights are protected. At Petriello Law, we have significant experience preparing and negotiating use and occupancy agreements for both Buyers and Sellers. We are well prepared to ensure that your needs are met.