It’s great if a New York real estate transaction is seamless for both buyer and seller. Unfortunately, it doesn’t often go that way in the real world, especially when complex finances are involved. It can be especially trying when you have to buy and sell a house at the same time. You might actually have enough liquidity for a down payment on another place, but your lender might not let you hold two mortgages simultaneously, preventing you from purchasing a new property without first selling your current one. Moving to a temporary location isn’t always convenient or feasible either. This is exactly the type of situation when a use and occupancy agreement could be a great option.
What is a New York Use and Occupancy Agreement?
A use and occupancy agreement (U&O) is an agreement between the property buyer and seller which allows a party to stay at the property for an agreed amount of time.
Situations Where You May Need a U&O
There are circumstances where either party (the buyer or the seller) may want to occupy the property for a short amount of time and will need to use a U&O. Here are some:
- The seller needs additional time to buy their next house
- The seller has found their next house, but the closing is delayed
- The seller is selling the home to their children, but want to remain living in the home
- The buyer needs to move in prior to closing
- The buyer wants to set up a favorable mortgage interest rate
What is the Difference Between a U&O and a Lease?
The agreement is only for the use and occupancy of the property for the set amount of time and is not the same as a lease agreement. The use and occupancy agreement creates a license to stay on the premises and doesn’t create a tenancy. Thus, the U&O does not give you any tenant rights.
What Should the U&O Cover?
If all involved parties agree to the terms, then it should be contained in a written agreement. The U&O can include the following:
- Terms for circumstances if the occupant doesn’t close or vacate within the agreed upon time
- Liability for any damage
- Obligations for maintenance of the property
- Any payments involved
- Whether there are any limitations on the use and occupancy of the property
- If there are conditions or events that must be met before the use and occupancy will occur
Talk to a New York Real Estate Attorney Now About U&O Agreements
Both buyers and sellers may benefit from a use and occupancy agreement, given the situation. A qualified attorney can help you draft something that covers any contingencies and will protect your interests. Contact one of our MOWK Law lawyers to get started.