The difference between moving in and taking transfer
The difference between occupation and actual ownership of their new home confuses many buyers, but it is important to understand the difference, because it can have significant financial implications.
Berry Everitt, MD of Chas Everitt, says that in some cases, buyers are given occupation of the property before it is transferred into their name, which is when they officially become the new owners.
“However, most sellers will not allow this until their lender has supplied proper ‘guarantees’ to the transferring attorney that the purchase price can, and will be paid. And in most instances, the buyer who has occupied the property prior to transfer will also be required to pay occupational rental for the period between the date of occupation and the date of transfer.
“Along with the date on which the buyer will be given occupation, the monthly rate at which this rental will be charged must be written into the original sale agreement.”
He says this is also important “because the buyer and the seller will sometimes agree that the seller can stay on in the property even after the date of transfer, perhaps so that children can finish a school term before moving, or perhaps because the seller’s new home is not ready.
“And in that case, the situation will be reversed and the seller will have to pay the buyer occupational rental for the time between the date of transfer and the day he moves out.”
Everitt says it is also important to note that from the date of transfer, the buyer becomes responsible for the “risk” in the property, no matter who is in occupation.
“This effectively means that they must ensure that sufficient homeowner’s insurance is in place to cover damage to or destruction of the property in the event of fire, flood or other such disasters and must pay the annual or monthly premium on that policy.
“If the sellers are still in occupation at this stage, though, they will need to keep up the insurance on their own furniture and other possessions, as these will not be covered by the buyer’s new homeowner’s policy.”
