Occupancy Before Closing
The sellers moved out a few days before close of escrow, and the buyers wanted time to move in. They asked if they could just move items into the garage; they were not going to sleep in the house. The buyers were granted permission and began to move their belongings into the garage. During this time, they met the neighbor. This neighbor hated the seller and really wanted to make his life miserable. When the neighbor discovered the property had not actually changed hands, he told the buyer several lies about the house that made the buyer afraid to go through with the purchase. The buyers moved out of the garage and cancelled the contract. The seller attempted to keep the earnest money deposit, but the buyer threatened a lawsuit, which would prevent the seller from selling the property to someone else without settling with the buyers. The seller gave up the fight in order to place the home back on the market and get it sold quickly.
Although allowing the buyers to move in a few days before close of escrow does not always turn out to be a disaster, without some sort of monetary compensation for this extra time, you are setting yourself up for potential problems. Even if they only move into the garage, you will have the liability of a landlord with none of the protection or benefits.
In a lease option, the buyer does move in before close of escrow, but the seller has received monetary compensation. If you plan to allow the buyer to move in before close, have some of the funds released directly to you and/or require the buyer to pay rent. Coordinating a move can be difficult, and it is helpful to accommodate people. Just be sure that you are protected.
You need to have an understanding of the tenant-landlord laws in your state. If you do not have an agent, you may be able to find this information at your local county court house or on the Internet. If the buyer does move in early and you end up with a problem, you want to be sure that you can get the buyer out of the house easily. In some states, it can take several months to get a tenant out of a piece of property. Up-front monetary compensation will make the wait less of an issue.