Holdover Occupancy Agreement — RPI Form 272

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This form is used by a seller’s agent when the seller seeks to temporarily remain in possession of the property after the sales escrow closes, to prepare a rental agreement for the seller’s continued occupancy with conditions protecting the buyer if the seller defaults.

Your use of RPI Form 272

Occupancy agreements

The 2020-2021 surge in home prices boosted California homeowners’ home equity levels. Before prices are fully dragged down from their May 2022 peak by the encore of the 2020 recession, owners may take advantage of this fleeting equity boost by selling their primary residence and buying replacement property.

However, it’s not always possible to smoothly transition from the old residence to the new one. In this volatile environment where prices are looking for a bottom, it’s a greater challenge to time the current home’s closing with the purchase of a replacement home.

This logistical challenge has a solution: occupancy agreements.

An occupancy agreement creates a rental agreement for the buyer or seller to occupy the property as tenants until their replacement residence is secured. [See RPI Form 271 and Form 272]

A buyer’s agent uses the Interim Occupancy Agreement when the buyer seeks occupancy of the property before closing escrow. [See RPI Form 271]

A seller’s agent uses the Holdover Occupancy Agreement when the seller seeks to temporarily remain in possession of the property after the sales escrow closes. [See RPI Form 272]

Occupancy agreements are best attached to the purchase agreement as an addendum. They may also be agreed to prior to closing escrow or in a counteroffer. The agreement clarifies the buyer or seller’s ownership rights and, more importantly, creates a landlord-tenant relationship for quick resolution of any disputes over occupancy in the event of a default.

The holdover occupancy agreement

Under a holdover occupancy agreement, arrangements are made for the seller to retain possession of the residence after the sales escrow closes. [See RPI Form 272]

Such an arrangement allows for the seller to assume the role of tenant and the buyer to assume the role of landlord. The seller/tenant agrees to pay for the use of the property in exchange for the buyer/landlord to lease the newly bought property for a specific term.

The occupancy agreement provides for the rental period to terminate on a specified “fixed” time period. [See RPI Form 272 §2.1]

The agreement also specifies the:

amount of rent;
time of payment; and
method of payment. [See RPI Form 272 §3]

When the seller continues to occupy the premises after termination of the tenancy, the seller/tenant is to pay a day-to-day tenancy of a specified rental rate to discourage the seller from remaining as a holdover tenant beyond the agreed-to term. [See RPI Form 272 §3.7]

The security deposit and the first month’s rent (or all months’ rent) are best disbursed by escrow from the seller’s proceeds at the close of escrow. Supplemental escrow instructions are to be prepared instructing escrow to pay the buyer the rent and security deposit due. [See RPI Form 401]

Analyzing the holdover occupancy agreement

A seller’s agent uses the Holdover Occupancy Agreement published by RPI when the seller seeks to temporarily remain in possession of the property after the sales escrow closes. The agreement allows the agent to prepare a rental agreement for the seller’s continued occupancy with conditions protecting the buyer when the seller defaults. [See RPI Form 272]

The Holdover Occupancy Agreement sets forth:

Facts, such as the:
- referenced agreement (Purchase agreement, Escrow, Counteroffer);
- date;
- buyer’s/landlord’s identity;
- seller’s/tenant’s identity; and
- address [See RPI Form 272 §1];
Agreements, including when the occupancy terminates [See RPI Form 272 §2];
Rent information, including the:
- amount of the rent and security deposit to be handed to the buyer/landlord on close of escrow from the seller’s/tenant’s funds [See RPI Form 272 §3];
- time and method of payment [See RPI Form 272 §§3.1 through 3.5];
- rent will be prorated to the date the tenancy is terminated [See RPI Form 272 §3.6];
- amount the seller/tenant will pay per day when they holdover [See RPI Form 272 §3.7];
Security deposit information [See RPI Form 272 §4];
the seller is to timely pay utilities incurred during their occupancy [See RPI Form 272 §5];
the seller will keep the premises in good condition [See RPI Form 272 §6];
a hold harmless provision [See RPI Form 272 §7];
the buyer’s/landlord’s right to enter the property in case of an emergency or for necessary repairs [See RPI Form 272 §8];
the buyer/landlord may terminate the agreement when the premises are destroyed or damaged by the seller/tenant [See RPI Form 272 §9];
the seller/tenant may not assign or sublet any portion of the premises [See RPI Form 272 §10];
an attorney fees provision [See RPI Form 272 §11]; and
Signatures of the seller/tenant and buyer/landlord. [See RPI Form 272]