Early possession: Overview, definition, and example
What is early possession?
Early possession refers to the situation in which a tenant, buyer, or lessee is allowed to take possession of a property before the official start date of the lease, contract, or agreement. This arrangement is typically agreed upon by both parties, the landlord and tenant, or buyer and seller, and is often formalized through an amendment or addendum to the lease or sale agreement. Early possession can be beneficial for both parties, particularly when the tenant or buyer needs to begin using the property immediately or when the property owner wants to generate income from the property sooner.
For example, a buyer might take early possession of a property before the closing date of a home purchase agreement to begin making renovations or moving in, while the official ownership transfer takes place later.
Why is early possession important?
Early possession is important because it can provide flexibility and convenience to both parties involved in a transaction. For tenants or buyers, it allows them to start utilizing the property ahead of schedule, which can be particularly helpful in time-sensitive situations such as a business expansion or relocation. For sellers or landlords, granting early possession can facilitate a quicker turnover of the property and may allow them to fulfill their obligations faster, such as getting a tenant into a vacant unit or closing a sale more expediently.
However, early possession must be clearly defined in a contract to avoid misunderstandings regarding responsibilities such as maintenance, insurance, and payment.
Understanding early possession through an example
A company leases a new office space and, due to its urgent need for the space, requests early possession from the landlord. The landlord agrees, allowing the company to begin moving in and setting up operations two weeks before the official lease start date. In return, the company agrees to begin paying rent immediately, even though the lease technically doesn't begin until a later date. This arrangement allows the company to get a head start on operations while providing the landlord with early rental income.
In another case, a homebuyer purchases a house but is unable to close the sale until the end of the month. However, they need to move in right away due to personal circumstances. The seller agrees to allow early possession under the condition that the buyer pays a certain amount of rent until the official transfer of ownership is completed. This arrangement provides the buyer with the space they need, while the seller is compensated during the interim period.
An example of early possession clause
Here’s how this type of clause might appear in a lease or purchase agreement:
“The Tenant shall be permitted to take early possession of the leased premises beginning on [Date], provided that the Tenant pays the agreed-upon rent starting from that date. The Tenant will be responsible for the maintenance of the premises from the early possession date, and the official lease commencement date shall remain [Date]. Any alterations or improvements made by the Tenant during the early possession period shall comply with the terms of the lease agreement.”
Conclusion
Early possession offers flexibility for tenants, buyers, and sellers by allowing the use of a property before the official contract or lease term begins. This can be beneficial in various situations, such as relocation, business setup, or personal circumstances. However, it is essential that the terms of early possession are clearly outlined in the agreement to avoid conflicts over responsibilities, payments, and the condition of the property during the early occupancy period. Both parties should ensure that the arrangement is legally documented and mutually agreed upon to ensure clarity and fairness.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.