I’ve been doing this for awhile but I heard something new just the other day. A potential buyer submitted a contract that had a clause allowing them to move into the unoccupied short sale home prior to closing. The attorney I spoke with sarcastically asked my opinion, knowing my answer.
That is a bad, bad, bad idea.
I immediately rattled off a number of reasons to not let someone move in prior to closing. But after our conversation I worked out a few of those possibilities into this blog.
First of all, if any number of things fall through, how are you going to get these people out of your house? Landlord-tenant court is not an easy or a fun route.
On top of this I wonder how many landlord-tenant judges have seen a case like this. They may be inclined to toss it over to Law Division as a contract dispute. That could frankly take years to sort out.
Second, what are you going to do with the rent? Some people sadly illegally rent their places while going through the short sale process. Of course, there is nothing wrong with renting your house, but if you are collecting rent and not paying the bank, that is not a good thing.
If there is an early move-in clause in your sales contract you had better count on the bank figuring out that you collected some funds from the transaction. This violates the Arms Length Transaction requirement of the agreement.
Third, what if they destroy your place? You don’t need the aggravation for the little money you would try to make and hide from the bank while moving forward with your short sale. It is just not worth it.
If you are selling or buying a short sale, don’t hesitate to contact our office to schedule a one-hour $250 consultation.