If sellers want a little more time in their property after a sale closes, it’s important they know how this negotiated term fits into their contract before committing to longer-term plans.
ORLANDO, Fla. – Sellers occasionally need more time in their house after closing. Sometimes they negotiate it as part of a whole contract, while other times they negotiate it after a contract has been signed. Either way, it’s helpful for both sides to understand how the form rider works.
The main form we hear about on the Florida Realtors Legal Hotline is the Florida Realtors®/Florida Bar CR-6 Rider U Post-Closing Occupancy by Seller. Is this the right form for a buyer and seller to use? Only if they are fine with the idea that either side can cancel the contract if they can’t successfully negotiate a lease.
Despite the title, this rider does not create an occupancy agreement. It creates a contingency.
Rider U centers around a deadline which, if left blank, will be 10 days before the closing date. That’s the deadline for one side or the other to deliver a mutually acceptable lease or occupancy agreement. Rider U prompts the buyer and seller to agree to the length of the post-closing occupancy and amount of monthly rent, but all additional terms of the lease (or occupancy agreement) are up for negotiation.
What if the buyer and seller can’t agree on terms? Then either side can cancel. That is the main function of Rider U, which provides “If the parties fail to deliver a mutually acceptable Post-Closing Agreement within the time period stated above, then either party by written notice to the other may terminate this Contract and Buyer shall be refunded the Deposit, thereby releasing Buyer and Seller from all further obligations under this Contract.”
What if a buyer, seller, or both really want the transaction to go through and don’t want to agree to a contingency that could lose them the deal? In that case, the parties are welcome to skip the rider and go straight to whatever form of post-closing occupancy agreement they can negotiate. Of course, if the contract is already in place, the seller should be hyper-aware that if their occupancy negotiations fail, they are likely obligated to move out on the closing date.
It’s worth noting that the Florida Supreme Court has only approved a single-family and multifamily lease form, so that is typically the only thing members will have to document a post-closing occupancy. If your brokerage has an additional form outside of the Florida Realtors forms library that could work, like a short-term rental agreement, check with an authority at your brokerage to see how that form works.
It’s also worth noting that the lease terms are always up to the buyer and seller, so defer to them if they have a preference. They may prefer a very casual and short agreement they put together. Or they may want to have their lawyer draw something up to document the occupancy. Still others may want to modify the purchase and sale contract to add some form of occupancy agreement that’s incorporated there.
One final note. CR-6 Rider T, Pre-Closing Occupancy by Buyer essentially mirrors the post-closing occupancy rider we just discussed. There are a few differences, such as the contingency deadline for the pre-closing occupancy rider is 10 days after the effective date, whereas the post-closing occupancy deadline is 10 days before the closing date. However, the key part of both is that they create a contingency deadline, after which either party can cancel, with the buyer receiving a return of the deposit.
Joel Maxson is Associate General Counsel for Florida Realtors
Note: Advice deemed accurate on date of publication
© 2022 Florida Realtors®
Go to Source