"The sale is completed, but the seller wants to stay for another 2 months."

Jonathan purchases a house from a family that is waiting for its new home to be completed.

The seller requests permission to remain in the house for two months after the sale is completed.

“We have already sold the property to you. We only need a little time to move. There is no need for another agreement.”

Jonathan wants to accommodate the family. He agrees verbally and allows the full purchase price to be released.

Two months later, the seller is still in the house. The new home is not ready, and the seller asks for another extension.

Jonathan is servicing his housing loan and paying rent elsewhere. His bank has released the financing, but he cannot occupy the property.

Allowing a seller to remain after completion is possible. It should not, however, be treated as an informal favour without clear legal and financial terms.

1. Completion and possession do not always occur on the same day

In many subsale transactions, the purchaser becomes entitled to vacant possession after the balance purchase price has been paid according to the SPA.

The keys are then delivered and outgoings are apportioned based on the agreed date.

If the seller remains after completion, the transaction departs from that usual arrangement.

The parties need to distinguish between:-

• legal completion of the sale;

• registration of the transfer;

• release of the purchase price;

• delivery of the keys; and

• actual vacant possession.

The SPA or a separate written agreement should state which event occurs when.

2. What is the seller’s status after completion?

Once the property has been sold, the seller is no longer occupying it simply as its owner.

The arrangement may be documented as a temporary licence to occupy or another form of permitted occupation.

Calling it a “licence” is not conclusive by itself. The substance of the arrangement, its duration, the rights granted and the parties’ conduct may affect its legal character.

The document should make clear that the arrangement is temporary and does not create any right beyond what the purchaser has expressly agreed to provide.

It should also prohibit the seller from transferring possession, bringing in another occupant or creating any tenancy.

3. Set a definite date - not “until the new house is ready”.

The end date should be objectively identifiable.

A clause allowing the seller to remain until another property is completed places the timing outside the purchaser’s control. Construction delays could extend the occupation for months.

A better-defined arrangement identifies:-

• the commencement date;

• the final date and time for delivery;

• whether any extension is permitted;

• who may approve an extension; and

• the consequences of holding over.

Any extension should be in writing. Silence should not automatically amount to consent.

4. Should part of the purchase price be retained?

A retention sum can provide practical security for vacant possession and outstanding obligations.

The agreement should specify:-

• the amount retained;

• who holds it;

• the purpose of the retention;

• when it may be released;

• what deductions are permitted;

• whether deductions require notice; and

• what happens if the seller disputes them.

The retained amount should be commercially meaningful when compared with the property value, moving costs and potential enforcement expenses.

If the entire price is released, the purchaser loses an important source of leverage. The seller may have little urgency to vacate, particularly if an extension carries no financial consequence.

A solicitor cannot create a retention after completion without contractual authority or the parties’ agreement. It must be arranged beforehand.

5. Should the seller pay an occupation fee?

The parties may agree on a daily or monthly occupation fee.

The amount may reflect the purchaser’s loan instalment, alternative rent, market rental or another negotiated figure.

The agreement should state whether the payment is:-

• an occupation fee;

• compensation for delayed possession;

• a contribution towards outgoings; or

• a sum payable only if the seller remains beyond the agreed date.

The terminology and structure should be reviewed carefully so that the document reflects the intended legal relationship.

A substantial holding-over rate may encourage timely delivery, but an excessive penalty may raise enforceability issues. The amount should have a defensible commercial basis.

6. Who pays for utilities and property outgoings?

The seller who remains in occupation continues using water, electricity, security and common facilities.

The document should allocate:-

• utility charges;

• maintenance charges;

• sinking-fund contributions;

• quit rent or parcel rent;

• assessment tax;

• sewerage charges;

• repairs; and

• any penalties caused by late payment.

Meter readings should be recorded at the beginning and end of the occupation period.

If the accounts are transferred into the purchaser’s name before the seller leaves, the seller should reimburse actual consumption and provide access to the bills.

7. What if the property is damaged?

An inspection and photographic record should be prepared when the temporary occupation begins.

The seller should be required to maintain the property and return it in the agreed condition, allowing for reasonable wear and tear if appropriate.

The agreement should address:-

• accidental damage;

• removal of fixtures;

• unauthorised alterations;

• damage caused by family members or contractors;

• rubbish and abandoned belongings; and

• the purchaser’s right to inspect before taking possession.

Insurance or takaful coverage should also be checked. The insurer and purchaser’s bank may need accurate information about occupation and risk.

8. The purchaser’s bank may have its own requirements

The purchaser should not agree to delayed possession without considering the financing documents.

The bank may have approved the facility based on a purchase for owner-occupation or may impose conditions regarding the security, insurance and use of the property.

The purchaser should also consider whether the financing documents require vacant possession or prohibit arrangements affecting the bank’s security.

A private agreement with the seller cannot override the bank’s rights.

9. What if the seller refuses to leave?

The purchaser should not assume that changing the locks or removing the seller’s belongings is automatically lawful.

The written arrangement should provide for:-

• notice of expiry;

• delivery of all keys and access cards;

• release or deduction of the retention sum;

• occupation charges for holding over;

• recovery of enforcement costs; and

• legal proceedings for possession if necessary.

Even with a strong agreement, court proceedings may still be required if the seller refuses to vacate.

That possibility should be considered before the purchaser agrees to an arrangement that leaves the seller physically in control of the property.

10. Early possession creates the reverse risk

Similar concerns arise where the purchaser asks to move in before completion.

If the sale later fails, the seller may need to recover possession from someone who has already renovated or occupied the property.

Early possession requires terms governing risk, insurance, utilities, alterations, rent, termination and restoration.

Neither party should hand over possession merely because the transaction is “almost complete”.

11. An act of goodwill still needs proper documentation

Jonathan may decide to give the seller two months. That is a commercial choice.

The risk arises when the parties do not state what happens on day 61.

Before the balance price is released, document the occupation period, financial consequences, outgoings, condition of the property, retention sum and procedure for obtaining possession.

Helping a seller move comfortably should not leave the purchaser paying for a house that he cannot enter.