Ready to Close—But the Home Isn’t Empty

You’re ready to close on your new home. There’s just one issue. On what you thought was your final walk-through, the home still has an occupant. Or, surprise! It’s still cluttered with the seller’s rugs and lamps.

Let’s talk about how to avert this scenario — and how to deal with it if and when it happens.

Setting Expectations: Empty and “Broom Clean” by Closing

A seller legally owns the home until the moment of closing. That said, a buyer expects a final walk-through to confirm everything is ready as agreed. If the home isn’t ready, your agent may suggest delaying closing. This will let you arrange another walk-through before you sit down to sign all the paperwork.

Granted, you’ve jumped through hoops for weeks to get to the verge of closing. The last thing you want is a delay. But caution matters, for several reasons:

• If the sellers are still moving things when you’re signing the paperwork, they could damage the home (perhaps without even being aware of it), leaving the repairs to you.

• If the home isn’t empty at closing, you might be stuck paying to have things hauled away.

If the seller has left items in the home, they should be things that you’ve both agreed should become your possessions along with the deed.

How a Contract Can Help Avert Drama

Contractual language can help. For instance, your agent can have the seller agree to a walkthrough the day before closing.

If the home is not ready then, you won’t sign the paperwork until it is.

The basic contract in many locations states that the home should be “broom clean.” The term means the floor may be swept throughout, with no objects in the way. The home is empty of moveable items unless the seller and buyer have agreed to another arrangement.

In their written agreement, the parties can even anticipate the costs of a cleaning team right in the purchase price — with the funds in escrow, ready to be returned if they aren’t needed.

If a home isn’t ready and there’s nothing helpful in your contract, your agent may be able to negotiate a closing credit for the cost of cleaning. This is a commonly agreed-upon solution.

Pre-Closing, Pre-Possession, and Funding

But perhaps your state doesn’t acknowledge possession until the funding comes through. If this is the way state law works where you’re buying, what happens? You could wait hours between the time you sign the closing paperwork, and the time your loan is funded and the seller’s agent receives your payment. It all depends on how quickly your lender moves the funds.

During the interim, the seller may rightly be in the process of moving out.

It would then make sense to plan for:

• One walk-through before you close; plus

• A second walk-through before you take possession.

You might be given the date and time the sellers plan to vacate, and arrange the walk-through to happen right after that time. In any case, the basic legal reality when you’re buying in these states is this. The home must be cleared out when you receive possession.

Buying a Home With a Renter Still Living There

If a renter is still in the home you’re buying when you attend the inspection, you’ll want to know the state’s law on rentals. Generally,  renters have a legal right to stay on throughout the terms of their leases. Yet laws might enable buyers to end rental agreements by previous sellers.

Allowing a renter to finish the term of the lease could be fine with some buyers — particularly those who can’t immediately move in. Buyers who intend to move in upon closing need an agreement that the  property will be vacant by the time of closing.

When the agreement involves a renter leaving the premises by closing day, potential buyers should be aware of the seller’s situation. One more person moving makes a real estate deal that much more complicated. Keeping tabs on the home inspection dates and keeping things clean are unlikely the top priorities of a renter who is preparing to move.

Without an appropriate rental agreement and insurance in place, it’s never a good idea to close until the home is empty. Buyers who make friendly exceptions may find unexpected damage — sometimes behind or under objects — when they finally move in. In the thorniest scenarios, a buyer may need to evict an occupant who has trouble getting ready to leave.

When the Seller Overstays

Now and then, the sellers themselves may be asking to rent from the buyers for, say, one month past the closing date. If so, put a rental agreement in place. Ask your homeowner insurance company to write up a renter’s insurance policy as long as it’s needed.

If the seller will be in the home in the lead-up to closing, your agent would be wise to have language in the contract to address the expected condition of the home during the final walk-through and when the buyer takes possession. Escrow funds can cover any damage that may happen during the seller’s move.  

Storage units? Hotel? Friend’s couch? Sellers often must cope with selling one home while buying another.

You might be concerned that an overstay could create the possibility of a delayed closing. It could also create the potential for items left in the home when you are ready to close.

State laws may dictate that any items left in the home become the buyer’s property upon closing. If that is not what both parties expect, then, with the buyer’s agreement, you could charge the sellers for storing their items past your closing date — essentially renting space to your seller. It’s critical that the parties sign off on any such arrangement in a written agreement.

Ask your agent about keeping a substantial sum in escrow—enough to cover any and all potential damage that could happen before you’re able to take possession. You can agree to rent the property to the stayover occupant, at a high price that deters any delays. All of this can be, and should be, negotiated in advance and signed off by the seller.

Plans can include keeping funds in escrow and not distributed to the seller until you have approved the condition of the vacated home. Your written agreement can also include a description of the condition expected, to avert last-minute disagreements.

Be prepared. Talk all of this through with your agent in advance!

Wrapping It Up

When you’re ready to close, a home should be in the condition you expect as a reasonable buyer. Yes, there are nuances and exceptions in specific cases. Yes, there are legalities and practicalities that vary by location. And you need to be prepared for those.

Continue learning by reviewing the Real Estate Purchase Contract language published by the home’s state. This is the template your real estate agent likely starts with. Parties to a contract can add and agree to particular ways they will resolve any snafus.

Need case-specific advice? Consult a real estate lawyer in the home’s state.