Properly calculating the length of seller’s post-closing possession

QUESTION: My buyer client has just closed on a property using the Offer to Purchase and Contract (form 2-T). The buyer agreed to allow the seller to remain in the property for 7 days after closing, so the Seller Possession After Closing Agreement (form 2A8-T) is a part of the Contract. The Settlement was held at the closing attorney’s office on the afternoon of January 10th, which was the day after the Settlement Date in the contract; however, the deed and deed of trust were recorded on January 11th.

A question has come up about what day the seller’s right to occupy the property ends. The number “7” was inserted in the blank in paragraph 1 of the Possession Agreement where it says “Seller may remain in possession of the Property for a period of _______ days after the Closing.” Does the 7 days begin to run on the Settlement Date, or the date the papers were signed in the attorney’s office, or the date the deed and deed of trust were recorded?

ANSWER: To answer your question, it is important to understand two concepts. The first is what “Closing” means and the second is how to count days according to the Contract.

In the Seller Possession After Closing Agreement, the seller’s occupancy is for an agreed-upon number of days “after the Closing.” “Closing” is defined in paragraph 1(m) of the Contract as the completion of the process that culminates in the recordation of the deed and deed of trust, if any. That may or may not take place on the same date as the Settlement Date in the Contract or the date that the Settlement actually takes place. In your situation, the process of Closing was completed on January 11th when the deed and deed of trust were recorded; thus, the seller’s period of occupancy is for 7 days after January 11th.

The second thing to understand is how the 7 days is calculated. According to the “Computation of Days/Time of Day paragraph of the Contract, “days” includes all calendar days, including weekends and holidays, and the count of days begins on the day following the date of the event to which the number of days is tied. In your situation, the 7 days is tied to the Closing.  Since the Closing process was completed on January 11th, the count of days would begin the day after January 11th. Accordingly, the count of days began on January 12th, and the seller’s 7-day term of occupancy runs through January 18th. Time is “of the essence” regarding the end of the term of occupancy, so if the seller isn’t out before January 19th, the seller would be in breach of contract and subject to the payment of hold-over fees under paragraph 4 of the Possession Agreement.

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