Getting in early: pros and cons of possession prior to settlement.

By in Buying, Selling

Sometimes property buyers want to move in before settlement is completed.  Reasons vary, but commonly it’s about keeping removalist bookings or a sale and purchase that didn’t coincide, leaving the buyer without a roof over her head.

Under the standard-form contract used in WA, known as the Contract for Sale of Land or Strata Title by Offer and Acceptance, the Seller is not obliged to allow prior possession, nor is the Buyer entitled to demand it. However, if the parties agree, the process is usually simple. Most real estate agents have a standard-form early possession agreement to formalise the arrangements.

Of course we recommend you obtain legal advice before you sign an early possession agreement. As your independent settlement lawyers, contact us to book a 30 minute consultation ($198) or a 60 minute consultation ($385).

The following very general points are based on the standard-form contract.

What should the buyer consider?

From the date of possession you are responsible for paying all outgoings (shire rates, water rates and strata levies). You must not make any alterations to the property until settlement is completed and you must keep the property in good repair. Importantly you must insure the property from the possession date. Should anything happen to it you are still obliged to complete the purchase.  If provided in the agreement you must pay the seller rent up to the settlement date.

What should the seller consider?

Legal ownership of the property does not pass to the buyer until settlement is complete. You will not receive the proceeds of sale until settlement is completed either.  Should any dispute or further delay arise it may be difficult to remove the buyer from the property.  Consider asking the buyer to pay rent or, at least, waive any claim they may have against you for penalty interest arising from any delay on your part.



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