A change was made to the Temporary Occupancy Agreement (TOA) in the June 1, 2023 contract forms. The change adds language in P.11 that attorney’s fees would be owed by the seller if the seller fails to vacate the premises as agreed and the new owner has additional costs or loses a tenant or a new sale. This is in addition to the right to attorney’s fees in P.12 if the situation goes to litigation. It gives the new owner a better bargaining position with the holdover seller without going to litigation.
Buyer Access to the Property
The TOA allows the new owner to enter the premises to “inspect, repair and maintain” (P.9) as well as to “inspect, examine, survey, meet contractors and prepare for Buyer occupancy of Property.” (P.10)
Some new owners do abuse these rights. To protect seller clients against abuse, consider adding the following language in the Special Stipulations on the TOA:
Holdover Daily Rent
The Seller sometimes needs to be encouraged to vacate the property on time. If the buyer has to file for an eviction, it takes time. Therefore, we recommend a daily holdover rent cost that gets the Seller to leave. Depending on the situation, a daily fee of $300, $500 or even $1,000 is not unreasonable. You don’t want to have a cost that is cheaper than a hotel and storage.
Rent for the Agreed Period of Occupancy.
Note that there is not a place in the GAR TOA for a rental fee during the agreed period of occupancy. If a fee is negotiated, be certain that its timing and method of payment is consistent with the terms of the buyer’s mortgage. An alternative way for a seller to pay a negotiated fee is to lower the price of the property to the buyer. It is common for the seller to remain in the property for no charge at all as a negotiated term of the sale.
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