Dear Heather,

I have just sold a house that I was renting out, although it is now vacant. We are due to close in the middle of September. However, the buyer’s lease runs out at the end of August and they want to move in early. What are your thoughts? Is it OK to do this?

Seller

Dear Seller,

My thoughts are no, never and don’t! Buyers should never be allowed to take possession of the home before closing because there are too many potential legal, insurance and repair issues. I would handle this issue with deep concerns as it is fraught with potential problems.

What are those problems?

1. What would happen if the buyers were unable to close for some reason? They would be in the house and you would have little recourse on eviction, which would almost certainly be emotionally charged, messy and unpleasant.

2. What would happen if one of the people in or on the property was injured — who would be liable? You would, as the house would still be in your name and fall under your insurance policy.

3. What would happen if the buyer decided to start work on the property before closing?

4. What would happen if they moved all their furniture into the property and it was damaged by fire or flood?

5. What would happen if they decided, after living there for ten days, they actually did not like the property and did not want to buy it?

6. The most common problem is that they start noticing little things about the property that need attention and want to negotiate the price.

I think you are starting to get the picture …

A cardinal rule to live by is to never, ever let the buyers take possession of a property prior to closing. I suggest your buyers stay with friends, put furniture in temporary storage, negotiate an extension on their lease or any other option you can think of, but keep them out of the property. If you have absolutely no choice in the issue and you must deal with having the buyer take possession prior to closing, follow these steps and be aware that it will mean extra lawyer fees out of your pocket:

1. To properly protect all parties, you will need both a purchase agreement and a separate lease agreement. Removing a “buyer in possession” under a purchase agreement is a much more difficult and costly task.

2. You must treat both transactions as separate. In other words, the buyer/lessee must provide their down payment for the purchase, a separate security deposit and the first month’s rent for the lease.

3. Take pictures of both the interior and exterior of the property to document the condition at the time that the buyer takes possession. Have both parties sign off on the condition of the property prior to giving the buyer/lessee the keys.

Houses seem to know when the owners change, and it is common to have some problems with appliances and systems right after closing.

Particularly if the home has been rented, the tenants may have experienced a problem with something but neglected to tell you for fear of being blamed or charged.

Here is the bottom line: the next time someone has the idea to let the buyers take possession before closing, remember these cautionary recommendations and do whatever is necessary to avoid an early possession nightmare.

• Heather Chilvers is among Coldwell Banker Bermuda Realty’s leading sales representatives. She has been working in real estate for 27 years. If you have a question for Heather, please contact her at hchilvers@brcl.bm or 332-1793. All questions will be treated in confidence. Read this article on Facebook: Ask Heather Real Estate