Letting the Buyer Move In Before the Deed of Sale in Quebec: The Occupancy Agreement

Your buyer has handed back the keys to their apartment, and the signing at the notary's office is still three weeks away. They ask whether they can move in early. Or the reverse: your next home is not ready, and you would like to stay a few days after signing the deed. In Quebec, ownership changes hands when the deed of sale is signed before a notary, not when the offer is accepted, so in both cases someone is living in a house they do not own, or no longer own. Elsewhere this is sometimes called early possession or a rent-back. This article covers what it means for the seller and what a written occupancy agreement should include. Negotiating the dates themselves is covered in our article on possession and occupancy dates.

What the promise to purchase already sets

The OACIQ promise to purchase form (Quebec's standard offer form, regulated by the real estate brokerage authority) sets an occupancy date: the date on which the seller agrees to make the premises available to the buyer. It often matches the signing of the deed, but not always.

When the parties want to depart from that schedule, a verbal arrangement is not enough. Anything not written in the promise, or in a separate agreement signed by both parties, is left to be negotiated at the moment a problem comes up.

Buyer moving in before the deed: the OACIQ's warning

Before the deed, the seller is still the owner. The buyer only holds a contract committing them to buy. The OACIQ advises against early occupancy because it puts the seller at significant risk:

• repairs or damage by the buyer could compromise the signing of the deed;
• if the buyer's insurance is inadequate, the seller may have to rely on the buyer's ability to pay to be compensated;
• if the buyer ends up refusing to sign and to leave, the seller could have trouble getting the house back.

If the seller agrees anyway, the OACIQ recommends that the conditions be set in writing and signed before a notary, and that the buyer provide a substantial deposit as a sign of good faith.

The clauses of an occupancy agreement

Whether occupancy comes before or after the deed, the written agreement should settle at least the following:

• Dates: start and end of occupancy, and what happens if the deed is postponed.
• Occupancy fee: a daily or monthly amount, who pays it, and when.
• Running costs: electricity, heating, snow removal, upkeep.
• Condition report: dated photos on entry and exit, meter readings.
• Keys: how many copies, handed to whom, and on what date.
• Work: no renovations, demolition or painting before the deed without written consent.
• Exit: how long the occupant has to leave if the sale falls through, and the amount owed per day of delay.

Insurance and risk of loss: who covers what

Until the deed is signed, the seller remains the owner and the seller's home insurance covers the building. A fire or water damage while the buyer is living there is therefore first a matter for the seller, the seller's insurer and, where relevant, the promise to purchase. What the contract provides when the property is damaged before closing is covered in our article on property damaged between acceptance and closing.

The seller should tell their insurer that someone else will be living in the house. A policy written for an owner-occupied home does not necessarily cover the same things when a third party lives there. The buyer insures their own belongings and civil liability, and gives the seller proof of insurance before getting the keys.

The reverse: the seller stays after the deed

Once the deed is signed, the roles flip. The buyer is the owner and insures the building; the seller is now just an occupant. The seller's homeowner policy no longer fits the situation, and the seller should check with their insurer how belongings and liability stay covered for those few days.

The agreement then provides for a fee paid by the seller to the buyer, a firm departure date and an amount per day of delay. A holdback on the sale price, kept by the notary until the keys are handed over, is a common way to give that date some weight.

If the deed is never signed

This is the scenario the agreement should address first, because it is the most expensive one. The buyer's financing can fall through, a condition can fail, a disagreement can surface at the final walkthrough. The buyer is then living in a house they may never buy.

The agreement should set the time allowed to leave, the fee owed for the whole occupancy period, the restoration of the premises and what happens to the deposit. Without those written rules, the seller ends up negotiating an occupant's departure at the very moment the sale collapses. The broker and the notary can help draft these clauses; they are useful before the keys change hands, not after.