Possession in real estate is the happy day when a buyer gets their keys, and a buyer's REALTOR® can begin to breathe again. A walkthrough could be defined as the opportunity for a buyer to take another look at the property at some stage of a transaction. Based on those definitions then, a pre-possession walkthrough is a chance for the buyer to take one more look at the property between when they removed all their conditions to buy the property, and when they get the keys and the money has transferred. Let’s take a look at some thoughts surrounding this practice and see how it could be troublesome.
Unconditional means exactly thatOnce a property has been selected as a buyer's very favourite of all available in the market, they make an offer that usually has several conditions. Most common are financing and property inspection, but could run the spectrum of any number of conditions the buyer determines are important to them, and the seller agrees to allow. Once the buyer removes their conditions, the contract becomes an unconditional purchase contract and the buyer immediately has an insurable interest in real property despite the weeks or months it may take for the title and money to change hands. This unconditional status means that regardless of circumstances the buyer IS buying that home or the consequences are huge and potentially far-reaching.
One last lookIf a buyer has reservations about the condition of a property after the sellers move out, or want to ensure that a specific thing the seller agreed to do to the property gets done, they may ask their REALTOR® for one last look a few days before possession takes place. Unless this was written into the contract, the seller has no obligation whatsoever to permit such a request. If it is written into the contract as a term, the seller is obligated to allow the entry, but it changes nothing about the contract itself, or the buyer's ability to “back-out”. Essentially, the buyer is in the position of seeing the property one more time, in possibly their most vulnerable emotional moment before closing, with no power to change the outcome of the situation.
A clear contract makes a good closingThe best time to handle situations is of course before the situations happen, if possible. Checking up on a seller's obligations is easily handled by way of evidence before closing, and consequences for non-performance are built right into the term. A REALTOR® can help a buyer ensure the situation is covered in the contract without the need for a pre-possession walkthrough in most cases. Check out my article on hold-back terms here. As for conditions, the buyer can ask for as many types of inspections, entries, or experts as they feel they need to be comfortable with the purchase by way of condition. This ensures that the seller has agreed to the conditions as part of the contract with the understanding that the buyer could be unsatisfied with what they find before removing their conditions. If a buyer completes all of their due diligence and removes their conditions, the seller can then feel secure that the transaction will proceed. This avoids the futile attempt of a buyer trying to stall the closing when the stakes are high during a pre-possession walkthrough where no teeth were built into the contract.
One-offIt would be foolish to say there is never a place for a pre-possession walkthrough, since predicting all the possible real estate situations would be like trying to count evergreen trees in Banff national park. A REALTOR® is specially situated to help a buyer navigate the complexities of a specific transaction and help determine where a term is best, additional conditions are better, or if in the rare circumstance that a pre-possession walkthrough may be necessary. Because of the legal pitfalls, and high buyer stakes attached to such walkthroughs, legal advice on crafting an adequate term for the contract should be sought.
Although a pre-possession walkthrough and the drama that could potentially result make for great television, in the real world of real estate, there are better tools to employ to protect the buyer’s and seller’s interests. Leaving the pre-possession walkthrough as a rarity serves all parties best, and ensures the gravity of the situation that requires one is given its proper legal consideration.
Provincial Practice Advisor
Bryan has many years of experience in the real estate industry including over 10 years as a former broker in the Edmonton Region.
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