Should we get the Keys before Settlement?
You might be wondering if you can get the keys before settlement to make the moving process less stressful or your lease may be up so you are wondering if you can move in sooner?
Whilst it may be convenient to take early possession of the property before it settles there can be consequences as well.
Two main considerations should be taken into account if early occupation is agreed upon:
- The purchaser will be required to provide evidence of adequate insurance prior to occupation to ensure the vendor’s interests are protected should something happen to the property prior to settlement.
- Confirmation from the purchaser will be required that they have completed their final inspection of the property and accepts the property in its current state of condition and repair and accept all risk and liability associated with early occupation.
Early access to a property is rarely allowed today except under a Licenced Agreement which protects the interests of both parties. A Licence Agreement should not be entered into without legal advice.
The seller is not under any obligation to allow early possession. Buyers may elect to request early possession however due to the associated risks involved in allowing early access the seller may be reluctant to grant an early possession. If the Vendor occupies the property they may not be intending to vacate the property themselves until the day of settlement so early occupation will depend on the buyer and seller’s unique circumstances.
We strongly suggest seeking legal advice before requesting early possession or before agreeing to the grant of early possession so you are well equipped with the pros and cons of taking this course of action. If you have engaged a Solicitor or Conveyancer they will be able to handle the request on your behalf ensuring that all parties are aware of their rights and obligations.
If occupation under Licence is agreed the following conditions will be outlined in the licence agreement:-
- The property must be maintained in an ‘as-is’ condition at the date of possession. Fair wear and tear is acceptable and reasonable however the buyer must take care to ensure the property is maintained to an acceptable condition until settlement occurs;
- Entering the property does not create a Landlord and Tenant relationship – it is under a Licenced Agreement;
- The buyer must ensure the property is insured adequately.
- The buyer indemnifies the seller against any expenses or damages incurred by the seller as a result of the buyer’s possession before settlement.
- An agreed weekly rent and possibly a penalty rent if the purchaser does not settle by the Contract completion date.
Seller Risks for Early Possession
- If the purchaser defaults or delays settlement it can be timely and costly to remove the buyers from the property if settlement does not occur, or if a dispute arises with the buyer. You may even be required to resort to legal action to remove the buyers from the property; and
- Damage could be done to the property by the purchasers or further demands for works despite the fact that the purchasers accepted the property ‘as is’. Whilst the demands won’t legally stand if an adequate Licence Agreement has been signed, it can still cause unreasonable delays.
Buyer Risks for Early Possession
- You are not entitled to make alterations to the property if you are granted early possession;
- The house must be maintained in the same condition it was at possession;
- Regardless of any other clauses in the Contract, from when the buyer takes possession they accept the property in the physical condition it Is in at the date; agree to make no objection or claim in respect of the property’s state of repair or condition; will be deemed to have acknowledged that their searches of the property are in order and agree to make no claim or objections regarding any matters raised in those searches.
- You will be responsible for rates from the date of possession.
Early Possession – What Should be Considered
- The specific details of the agreement;
- The costs associated with the agreement to each party;
- The utilities should be transferred into the buyer’s name;
- Buyers should agree to maintain the property in an ‘as-is’ condition;
- The insurance should still be maintained by the seller as they still own the home; and
- The parties should be completely aware and comprehend their obligations and responsibilities before agreeing to anything.
If you plan to ask for early access to a property, or a purchaser wants access to your property before settlement, be sure to seek advice from our Conveyancers beforehand who will be more than willing to help to make this process easier for you. Give us a call on 1300 224 828.