Is a Post-Closing Occupancy Agreement Right for You?

Updated: Jul 1

The advantages and disadvantages of a post-closing occupancy agreement.

What is a post-closing occupancy agreement? In Colorado, a post-closing occupancy agreement is exactly what it sounds like. It’s an agreement where the seller gets to occupy the property they’ve sold after the buyer closes on the deal. The seller is now a renter. In many cases, sellers are negotiating a free rent-back. In Colorado, this is so common that we have a form for our contracts that allows for a post-closing occupancy of up to 60 days.

It might help you win a property that you wouldn’t normally be able to get.

What is the potential advantage of requesting or granting one? From a seller’s standpoint, the advantage is that you get to live in your house while you go out and write a non-contingent offer on your next home. It gives you a lot of breathing room. As a buyer, the advantage is that it might help you win a property that you wouldn’t normally be able to get. The seller may really want that post-closing occupancy. It can be a great tool.

What are some potential pitfalls and disadvantages? For sellers, the disadvantage is that you’re now renting a property from the buyer. You need to get a different insurance policy, you may need to pay them back, and there may be people coming into the house after the closing. You’ll still be under pressure from that 60-day window. If your plans end up taking 90 days, you’ll be forced to move twice.

From a buyer’s standpoint, you might have a seller who causes damage to the property. You'd also need to let your insurance and mortgage companies know; if the post-closing occupancy is for more than 60 days, the mortgage company might want additional coverage or cause your rate to change. The biggest disadvantage is the time lost between closing and when you can actually live in the home.

If you have more questions about post-closing occupancy agreements and how they might benefit you if you’re looking at buying or selling, reach out to us and let us know. We’re happy to help.

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