Sometimes the purchaser of a property will ask the owner if they can move in early i.e. before settlement is to take place. This can occur where the owner has already vacated the property and the purchaser does not want to wait until settlement which could be the standard 6 weeks or even many months later.
Such an arrangement, if the owner consents, is normally done by way of a licence agreement under which the purchaser pays a weekly fee to occupy the property. Although the obvious benefit for the owner is the receipt of income, the risk is that if the settlement does not occur for some reason then it may be difficult and costly for the owner to remove the purchaser from the property.
For the purchaser the risk is that they must keep the property in the same condition it was in when possession was taken and be responsible for any damage caused before settlement. Also, the purchaser will have to take out insurance for the property and pay outgoings.
Any Licence Agreement should at least cover the following:
- The licence fee payable;
- Date of commencement and expiry of the licence term;
- Responsibility for repairs and maintenance of the property:
- Indemnity by the purchaser to the owner to cover any losses incurred as a result of the occupation;
- Insurance for the property by the purchaser;
- Payment of outgoings and services by the purchaser; and
- Allowing the owner to inspect the property upon notice.
Both the purchaser and the owner should obtain legal advice concerning any proposed licence agreement and whether it is appropriate in the circumstances.
October 2025