After a real estate transfer, how can I remove a holdover seller who refuses to leave the property?
UPDATED: February 20, 2013
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A holdover seller is one who remains in a property after a real estate transfer has occurred and closing has taken place. The new real estate owner may find it difficult to remove the previous occupant from the property once the title has been transferred.
During a real property transaction, it’s a good idea for homebuyers to inspect the property within 24 hours of title transfer. If the seller has not moved out, it is wise to delay the closing date until the house is vacant. Before the close of a real estate sale, the buyer has leverage over the seller, but this changes after the transfer of title. At that point, removing the previous property owner may require paying moving expenses or compensating the holdover seller in some way. As the buyer and new occupant, you may need to follow your state's unlawful detainer eviction laws. It may be helpful to consult an attorney with experience in real estate law.
A Holdover Seller can be a Real Estate Buyer’s Nightmare
Imagine going through the effort and stress of looking for your dream home, finding it, entering into a contract to purchase it, having all necessary inspections done by third party experts to safeguard against hidden problems, getting a loan approved, and then closing escrow to find out on the day you are to move into your new property that the prior owner still lives there and refuses to move.
The moving van, your friends and family are all prepared to move you into your new property and you are unable to proceed due to a change of heart by the prior owner who still has all of his belongings in the property that is now in your name. What do you do? What could have been done to prevent this situation?
Preventing a Holdover Seller Situation During Your Real Estate Transaction
To safeguard against a holdover owner, it is wise to obtain a written purchase agreement signed by the buyer and seller setting forth a specific date for move out, preferably a day or so before close of escrow so that the new real estate owner can verify that the seller has vacated the property before final documents are signed and the real estate transaction closes.
Additionally, the written agreement for the real estate sale should provide that the locks to the property will be changed by a locksmith when the property owner has vacated the home and the keys for the new locks will be deposited with the escrow company to be given to the new property owner when the title changes. By doing this, the new owner is assured that the seller has vacated the property and cannot easily return due to new locks and keys.
The real estate seller is protected by this transaction because escrow has the keys to the new locks which will not be given to the new owner until the property title is transferred.
Another way to prevent a potential holdover is to have escrow instructions signed by the buyer and the seller stating that a significant sum of money due to the seller will given to him when the new owner is in actual physical possession of the purchased property to the former owner's exclusion. This motivates the seller to cooperate with the buyer in vacating the property in a timely fashion.
It is prudent to have a competent attorney with real estate law experience review all transactional documents concerning the purchase of real property to safeguard against possible problems. An attorney can protect your interests from the purchase negotiations through the designated close of escrow date.
Removing a Holdover from Your New Property
In most states in the U.S., unlawful detainer statutes afford a property owner an expedited means to resolve a dispute concerning a holdover tenant. These statues allow a dispute to go to trial in 45 to 60 days, as opposed to the months and years required by disputes that do not deal with unlawful detainer issues.
Most real estate purchase contracts between the seller and buyer also have an attorney’s fee clause that entitles the prevailing party to reasonable attorney’s fees in the event of a dispute arising out of the contract. So if the former real estate owner refuses to vacate after he is no longer on title, a competent attorney in the area of real estate law should be immediately consulted and retained to help remedy the situation.
In the event of a favorable judgment for the new real estate owner by the court in an unlawful detainer action, the court will order removal of the offending former owner within a set period of time. If the former owner fails to comply with the court's directive and leave the property, law enforcement may come to the property under the judgment of eviction and physically remove the holdover seller.