Granting possession prior can help to smooth out sticky situations before settlement, but it should be used sparingly, because there are serious risks attached.

Often, buyers are keen to get into their new home. When the vendor has already vacated the property, it’s not uncommon for buyers to want to move in prior to settlement date – after all, they ask, what’s the harm?

One of the staff members at Residential Settlements is currently studying for their conveyancing license, and as they have discovered, possession prior is not as simple as it initially seems.

When a buyer takes possession of a property before settlement has occurred, the contract becomes a terms contract. As a result, the buyer becomes exposed to the following risks and consequences:

These are significant risks to a buyer. To avoid these risks and consequences, it’s best to use possession prior only as a last resort. If the buyer is given possession prior, it’s up to both the agent and the settlement agent to inform them of the risks and advise them to complete their due diligence.

Image by Jonah West via Flickr.

About the Author

Residential Settlements

We provide real estate settlement services throughout Western Australia. In addition, we complete Related Party Transfers, Family Transfers, Private Sales and other title related services.