Pre Closing and Post Closing Occupancy Issues

This article addresses the issues and risks associated with pre closing and post closing occupancies in Florida real estate transactions using Florida Realtors and Florida Bar contracts, commonly referred to as FAR/BAR contracts.

Pre closing and post closing occupancies require careful consideration. While these arrangements may be convenient and economical for the party needing occupancy, they expose the landowner or future landowner to significant liability and risk. As a best practice, pre closing and post closing occupancies should be avoided whenever possible.

When such an arrangement cannot be avoided, the FAR/BAR contract requires the use of either Addendum T for pre closing occupancy or Addendum U for post closing occupancy. These addenda are referenced in paragraph 19 of the contract. Importantly, these addenda are not occupancy agreements themselves. Instead, they require the buyer and seller to enter into a mutually acceptable written lease within ten days.

The addenda outline certain terms such as rent, responsibility for repairs and maintenance, and which party pays for preparation of the lease. However, the lease is the controlling document that establishes the full agreement between the parties and creates a Florida landlord tenant relationship. If the parties fail to enter into a written lease within the required time period, either party may terminate the contract, the buyer will receive a refund of all deposits, and both parties are released from further obligations under the contract.

It is critical that a written lease be executed for any pre closing or post closing occupancy so that the arrangement falls under the Florida Residential Landlord Tenant Act, Chapter 83, Part II of the Florida Statutes. This act provides landlords with access to the eviction process and the summary eviction procedures set forth in Chapter 51 of the Florida Statutes. These remedies are relatively fast, well established, and cost effective.

If a pre closing or post closing occupancy is created without a valid lease, the arrangement may fall outside the protections of the Residential Landlord Tenant Act. In those cases, the remedies available to the non defaulting party are significantly slower, more expensive, and more complicated than a standard eviction.

Why a Lease Is Essential

The safest approach is to never rely solely on contract language or addendum provisions to create a pre closing or post closing occupancy. A properly drafted lease should always be used. The addendum language must be followed precisely, and the lease should be prepared by an attorney to ensure compliance with Florida law and applicability under the Residential Landlord Tenant Act.

Example Scenario

Consider the following example. A buyer and seller enter into a contract for the sale of property. Within the contract, the parties agree that the buyer may occupy the property prior to closing pursuant to an addendum, but no written lease is ever executed. The buyer later defaults under the contract but refuses to vacate the property. The buyer then records an affidavit in the public records claiming occupancy rights under the contract.

This scenario creates two serious legal issues. First, the seller must remove the buyer from the property. Second, the recorded affidavit creates a cloud on the title, preventing the seller from selling the property to a third party until the issue is resolved.

Because no lease exists, the seller cannot use the eviction process under the Residential Landlord Tenant Act. Instead, the seller must rely on more burdensome legal remedies.

Ejectment and Unlawful Detainer

One available remedy is ejectment under Chapter 66 of the Florida Statutes. Ejectment allows the seller to remove the occupant and attempt to clear the cloud on title. However, ejectment is a full scale lawsuit, can take a year or more to resolve, and may involve a jury trial.

Another option is a forcible entry and unlawful detainer action. This process may restore possession of the property to the seller more quickly, but it does not resolve title issues. It is still a lawsuit and is more expensive and time consuming than a standard eviction.

If the parties had executed a proper lease as required by the addendum, the seller could have used the eviction procedures under the Residential Landlord Tenant Act. This process is faster, less expensive, and may allow recovery of unpaid rent or other damages.

Short Term Occupancies Still Require Full Leases

A lease is valid under Florida law regardless of whether the term is a few days or several years. Even short term occupancies require comprehensive lease provisions addressing security deposits, insurance, maintenance and repairs, utilities, taxes, rules, and lien protections.

Although it may seem excessive to prepare a detailed lease for a short occupancy, the same level of diligence is required because unexpected issues can arise. Proper preparation protects both the landlord and the professionals involved in the transaction.

Conclusion

Pre closing and post closing occupancies involve significant risk if not handled correctly. The consistent use of a properly drafted lease, prepared in compliance with Florida law and the applicable addendum, is essential to protect all parties involved.

If you have questions regarding pre closing or post closing occupancy issues, seek legal guidance before proceeding.

Source: Barnes Walker Educational Series