Seller Remains AFTER closing – Washington State

Due to the current sales market, we’re seeing a significant increase in sellers maintaining possession post-closing.  NWMLS form 65B, for seller occupancy after closing, states in the instructions that, “post-closing occupancy is risky,” and recommends that buyers not give sellers the right to occupy after closing.

If you have buyer clients contemplating allowing the seller to remain after closing as a negotiating tactic, here are a few things your client should consider:

• After closing the Residential Landlord Tenant Act (LTA) applies.  The buyer becomes a landlord and the seller becomes a tenant.  Per the LTA, the landlord must maintain the property, so if something breaks, the buyer will have to fix it.

• Per the LTA, the buyer/landlord has the “reasonable” right to inspect the property.  The seller/tenant has the right of quiet enjoyment.  These two rights can sometimes be in conflict.

• If the buyer wants the seller to pay a damage/security deposit, then, per the LTA, a move in inspection form must be completed – even though the property is already occupied.  The deposit must be held in a trust account as usual.

• The buyer will need to notify his/her insurance company that the seller/tenant will be remaining in place.  If there is a claim and the insurance company doesn’t know this, they may deny the claim.

• The NWMLS recommends that if the period of occupancy will be for more than a short period of time, that a full lease form, NWMLS 68, be used instead.  They also recommend referring your client to an attorney.

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There are no warranties, express or implied, including fitness for a particular purpose, made with respect to this communication. Nothing found herein should be construed as an attempt to offer or render a legal opinion or otherwise engage in the practice of law. You should obtain the advice of an attorney well versed in these matters.