Possession to Your New Home- Negotiation & Issues

You just signed all the documents to purchase your new home. Shouldn’t you get the keys right away? That would be nice, but it doesn’t happen quite that smoothly. Some states finalize the transaction immediately and keys are given right then, but that is not typical in Utah. There are different customs when it comes to delivering possession to your new home in our state.

The first thing that you need to understand is that possession is a negotiated item. You may take possession the same day that you sign your closing documents or you could negotiate to allow the seller time to move out after the sale. An FHA loan allows you to negotiate possession from the seller for up to 30 days after closing. Conventional loans allows the seller to stay up to 60 days after closing. Many buyers decide to use this as a negotiation tool to either get their offer accepted over another competing offer or to get a better price. Allowing sellers time to move out after the sale can be used to your advantage. You just need to remember why you did it. That will help later when you don’t get possession right away and feel the let down of not moving in immediately.

The second thing to know is that Utah allows for split closings. Utah is one of only a couple states in the Union that allows a buyer and seller to sign documents at different title companies. The escrow officers at each of the title companies are really good at communicating between each other, but there are other things that can add time to the transaction at the very end when everyone is waiting with anticipation for everything to finalize. Wire transfer cutoff times play a big role in when a property closes. If funds are not sent and received within those times it can cause delays. Because of this, it is wise to build in a little extra time into the transaction between signing at settlement and recording. The typical amount is 24 hours (1 Business day). For example, if you sign at settlement on a Thursday, it would record the following business day. If you sign on Friday it wouldn’t record until Monday. Keep this in mind when you negotiate your settlement deadline so that you can project forward to know the exact date of your possession.

The third thing to understand is that sellers oftentimes don’t want to move out prior to the property being recorded. It doesn’t happen very often, but it is possible to have issues arise between settlement and closing. Because of this sellers can be reluctant to move all their possessions out of a home before it has recorded. From their perspective, it would be terrible to be in a situation of being completely moved out and not have a sale finalize. Scary! So as a buyer, what does that mean to you? You may not have the opportunity to conduct a final walk-through as a vacant property. You may still do a walk-through, but the sellers may have boxes stacked everywhere waiting to move and you may not be able to inspect for any moving related damages. That shouldn’t stop you from doing this important walk through though. When you do a final walk through it is generally a month after you saw the home for the first time as a wide eyed and excited new buyer. Now you’ll be looking at the home with different eyes. You are not looking at what dazzled you, but now you are focusing on what your expectations are and the condition in which you want the property to be delivered to you. There are things that you might see this time that you didn’t see at the first time through or even during the inspection period. This walk-though is the last time we, as agents, can negotiate with the sellers and have any leverage through the purchase contract to get things done.

It requires a bit of patience after closing to deal with a delay in possession, but using this as a negotiation tactic can provide you with more benefits than drawbacks. If you do decide to use it to your advantage, make sure to always do your final walk-through prior to closing and try to schedule an in-person hand off of the keys when the sellers deliver possession to you. You can also have a “possession after recording” document prepared by the agents. It is essentially a lease. You determine if there needs to be any deposits or rent to protect your interest. Deposits are not typical for short periods of time. The main thing to think about is, “Do you trust the sellers to leave the property in as good of condition as you saw it in before you bought it?” If so, this might be a good way to get the property you want.