What Is Use and Occupancy (U&O)?

The term use and occupancy (U&O) refers to a real estate agreement between two parties, a homebuyer and a seller. It may allow a buyer to use and/or occupy a💙 property before ownership is transferred. Or it ma🤪y allow a home seller to stay on the property after closing.

A U&O can provide some security if complications arise due to financing problems or when there are delays in the closing process. Some go༺vernments require U&Os whenever properties are sold to secure the rights of all parties involved.

How Use and Occupancy (U&O) Works

Real estate 澳洲幸运5开奖号码历史查询:transactions may go smoothly—for the most part. However, in some cases, the parties involved may experience problems. For instance, the buyer in a 澳洲幸运5开奖号码历史查询:transaction may have difficulty securing or finalizing 澳洲幸运5开奖号码历史查询:mortgage financing, or there may be a delay in the closing if there is a problem for the seller clearing title to the property. Or, a seller may need to remain on the property because the construction of a new home hasn't been completed. When o🥀ne of the parties requires the use of the property before (the buyer) or after (the seller) the transfer of ownership, they may do so by drawing up a use and occupancy agreement.

U&O regulations usually require the property seller to pay a fee that varies depending on the municipality and allow a government official to inspect the property. The inspection ensures that the property complies with local housing codes and ordinances and that all the necessary permits have been filed. The inspection—also referred to as a resale inspection—must be completed within a limited timeframe. A 澳洲幸运5开奖号码历史查询:U&O certificate or certificate of occ🍨upancy (CO) is then issued.

In areas without a U&am♕p;O requirement, buyers and sellers can make their own determinations about the condition in which they are willin🐽g to buy and sell real estate, allowing the transaction to proceed quickly and smoothly. 

Special Considerations

The buyer may purchase a private澳洲幸运5开奖号码历史查询: home inspection and may ask the seller to make repairs as a condition of closing the deal. The seller is free to agree to make the repairs, to negotiate for the buyer to perform a portion of the repairs, or to walk away from the transaction. When the local government is involved, the seller is forced😼 to spend time and money to fix anything the government deems necessary without regard to the prospective buyer's requirements.

Advantages a✤nd Disadvantages of Use and Occupancy Agreements 

U&O ag✅reements between buyers and sellers of property can be used to cover unexpected changes to the move-in date and use of real estate. A U&O agreement could have terms that grant the buyer of a property early access to move furniture and belongings to the premises. The buyer would still have to wait until the official occupancy date before they could take full possession of the property. This may be necessary if the buyer has already closed on the sale of their prior property and must move.

The seller of a property might also run into issues closing the transaction and moving on to a new property. They could be left between the two properties without a place to occupy as an owner. A use and occupancy agreement would allow the new owner to permit꧙ the seller to remain on the premises for some adꦡditional time while the issues are resolved.

The terms of a U&O agreement will likely set strict time limits on how long the bu♚yer or seller might use or temporarily take up occupancy of the property. The agree꧑ment could also set guidelines that would allow the current owner to remove a temporary occupant if necessary.

The Bottom Line

A use and occupancy agreement can be useful to a homebuyer or seller, but it's important that a real estate lawyer draw one up to protect both parties. The agreement must outline the terms and conditions under which the buyer or seller can use and occupy the property, including the duration of the agreement and information concerning compensation, maintenance and damage, insurance, and more.