Updated: Oct 27
In this article I'll be going over the option for a buyer to possess a property prior to closing, specifically sharing the buyer possession agreement most typically used in Hampton Roads, VA. This document is different than a limited possession agreement and a seller possession agreement.
Here I'm sharing the document used primarily in Hampton Roads for buyer possession agreements in locations where REIN MLS is the primary MLS.
What is it?
A buyer possession agreement is where a seller allows a buyer to occupy a property before the buyer closes on a property. It’s done less often than seller possession agreements, which typically occur when the seller plans to purchase a home and the funds required for that purchase would require the proceeds of their sale.
It’s common for it to be between a week & up to 2 months.
Below is what a Hampton Roads REIN MLS Buyer possession agreement looks like, which includes elements like a security deposit from the buyer, an amount that they pay the seller in rent, late fee provisions, provisions for move out if they don't close, etc. The terms of this agreement, if present in an offer, are part of the negotiating process that can help determine whether or not the seller accepts your offer above other offers, so while not typical, in some cases a buyer is able to obtain one of these agreements rent free, though typically still including a security deposit.
How is the Seller Protected?
The seller may be protected in a number of ways with a buyer possession agreement. The REIN buyer possession agreements has built-in terms to add like:
A security deposit from the seller to be held by the buyer (Section 4)
A late fee (Section 4)
Insurance/liability provisions (Section 8)
Move out condition provisions (Section 5)
Utilities/maintenance repair provisions (Section 6)
Are There Any Incentives for the Seller?
The main incentive of a buyer possession agreement is the ability to obtain a stronger offer than you would potentially otherwise. In a competing offer scenario, sometimes the highest price offer or the one with the best other terms happens to include a buyer possession agreement.
Another potential incentive for the seller is the ability to charge rent to the buyer, especially if the seller isn't an owner occupant.
I do typically recommend that sellers request a deposit from the buyer even in competitive offer situations as a protection.
Security Deposit Disposition
All images courtesy Real Estate Information Network & Authentisign/TransactionDesk