What to Do When Home Seller Does Not Move Out Because of Seller’s Remorse!

The new home buyer does not want to be confronted with the situation that after the sale, the former owner will not vacate the property because of so called “seller’s remorse”.

Purchase Contract

The signed purchase contract between the buyer and the seller of the home typically controls the obligations owed by each party to the other. Consequently, it is very important that a buyer carefully reads and understands all provisions within all offers (or counteroffers) made for a piece of property. Normally the buyer and seller of real property have licensed real estate agents representing their interests in a given transaction. Prudence also suggests that a buyer and seller retain a licensed attorney in the state where the property is located, to review all documents for a possible sale to safeguard the interests of each.

Language to Safeguard a Buyer’s Interests in Purchasing Real Property

One of the best ways to prevent a holdover occupation by the seller is to add language in the purchase agreement (or addendum) placing safeguards as well as penalizing language in the sale agreement covering an unauthorized occupation of the property post close of escrow. Typical language in a written agreement signed by the buyer and the seller would include the following:

“The seller agrees to vacate the property to be sold at least two full days before the slated date of close of escrow removing all items of property from the premises before close of escrow.”

By doing this, the buyer is assured that before close, he can drive by the property and inspect it with his real estate agent to see whether the seller has moved out.

Also, consider adding a provision in the purchase agreement that once the seller has moved out of the property, the keys are turned into the escrow company before close. Such a provision has the effect of creating a course of action from the seller, though the seller could have extra keys.  In this event, insert a provision within the sales agreement that the new buyer, once the seller has turned in his keys, can have a locksmith come out before close to change the locks and the new keys will be held by the escrow officer. By doing this, the buyer has some assurance that only he has proper access to the property, once the escrow closes and the escrow officer hands over the keys.

Another safeguard for the buyer is to include a written provision in the purchase contract holding back a significant amount of money, such as $25,000.00, due the seller from the escrow as damages for the buyer if the seller fails to leave the premises after close. This money is only to be released when the buyer confirms in writing that the seller has moved out.  However, a problem arises if the sale is a short sale and the seller does not receive any money from the transaction. In such a case, there is no money to hold back.

Other Considerations

In most written sales agreements for real property, there is an attorney’s fee clause allowing the award of reasonable attorney’s fees to the prevailing party in a dispute between the buyer and seller. The problem arises when the seller refuses to leave a sold home and then files for bankruptcy protection. This causes the buyer additional expenses not contemplated when the agreement to purchase was signed.

Best Prevention Against a Holdover Seller

The best prevention against a holdover seller is to have all agreements reviewed by an experienced real estate attorney before the buyer signs anything. By doing this, issues not contemplated by the buyer can be discovered and any proper safeguards inserted in the written agreements and escrow instructions.

Case Studies: Dealing With Home Seller’s Remorse and Safeguarding Buyer’s Interests

Case Study 1: Unexpected Seller’s Remorse

John, the buyer, recently purchased his dream home after finalizing the sale agreement with Sarah, the seller. However, to his surprise, when the closing date arrived, Sarah refused to vacate the property, citing seller’s remorse. She expressed regret about selling the house and was reluctant to leave.

John faced the challenge of gaining possession of the property he legally owned without resorting to lengthy and costly legal proceedings. After consulting with a real estate attorney, John discovered that the purchase agreement lacked specific language to address seller’s remorse.

While the attorney initiated negotiations with Sarah’s legal counsel, they also prepared a court petition for possession to expedite the process if needed. In the end, Sarah agreed to vacate the property upon receiving a mutually agreed-upon compensation, allowing John to take possession of his new home.

Case Study 2: Securing Buyer’s Interests Through a Strong Purchase Contract

Emily, a first-time homebuyer, found her ideal property and entered into a purchase contract with Mike, the seller. However, Emily had concerns about potential holdover issues, as she heard about such cases from friends.

Emily’s real estate agent recommended a well-drafted purchase agreement that included specific language addressing holdover concerns. The purchase contract mandated that Mike vacate the property two days before the closing date, ensuring Emily had enough time to inspect the property and confirming that Mike had moved out.

Thanks to the safeguards in the purchase agreement, Emily was reassured about the closing process and could proceed with confidence. On the closing date, Emily and her real estate agent verified that Mike had left the property, and the keys were turned over to the escrow company for added security.

Case Study 3: Bankruptcy Protection and Buyer’s Recourse

Laura, the buyer, purchased a property from David, the seller, who, unfortunately, faced financial difficulties after the sale. David filed for bankruptcy protection, leaving Laura uncertain about the next steps. Laura was worried about her investment and the possibility of not gaining possession of the property due to the bankruptcy proceedings.

Laura’s real estate attorney reviewed the purchase contract and confirmed the presence of an attorney’s fee clause. This clause entitled the prevailing party to recover reasonable attorney’s fees in a dispute. While Laura couldn’t prevent David’s bankruptcy, she had a legal recourse for recovering her expenses if the court ruled in her favor.

Laura’s attorney filed a motion in bankruptcy court to seek possession of the property or compensation for damages due to David’s refusal to vacate. David’s bankruptcy proceedings complicated the matter, but Laura’s attorney’s skillful representation ensured her interests were protected, and she received the appropriate compensation.