Occasionally, after an escrow closes, a seller will request to leave some of the seller’s possessions at the property on a temporary basis. Buyers, being amicable and cooperative, will many times agree, particularly, if leaving the possessions does not affect the buyers. However, buyers and sellers fail to recognize the risk of leaving those possessions post close of escrow. Consider the following scenarios.
SCENARIO NO. 1: Buyer and seller close escrow on a property. Seller requests that seller’s possessions remain in the garage as seller is on vacation. Buyer agrees. Seller’s possessions are subsequently stolen as a result of buyer leaving the garage door unlocked. Seller asserts a claim against the buyer for negligence and the agents for a failure to advise regarding the potential risks of leaving the seller’s possessions at the property.
SCENARIO NO. 2: Buyer and seller close escrow. Seller has some large furniture at the property and requests that it remain at the property while the seller makes arrangements to have it moved. Buyer agrees. House subsequently burns down with seller’s furniture. Seller sues the buyer for negligence.
SCENARIO NO. 3: Seller leaves personal property at the property after the close of escrow. That property included a lamp which was plugged in. That lamp subsequently caught fire and burned down the property. Buyer sues seller for negligence
DISCUSSION:
As illustrated in this tip, there are risks affiliated with a seller leaving personal property at the real property once escrow closes. There is risk that the property could be damaged or stolen. There is also risk that the property could cause the buyer damage. Therefore, it is recommended that when sellers move from the property, all of their possessions are taken.
If a buyer and seller agree that seller’s possessions will remain at the property after the close of escrow to be picked up later, Broker Risk Management has updated its advisory and addendum regarding the risks affiliated with leaving the seller’s possessions at the property. Attached to this tip is an updated transaction Addendum form.
One other issue that will need to be addressed is insurance coverage. If a seller’s possessions are at the property after the close of escrow, buyer’s insurance is unlikely to provide coverage. The seller’s homeowner’s insurance is likewise unlikely to cover because the seller no longer owns the property. Therefore, the possessions are likely uninsured. The parties need to consider and be aware of that risk.
PRACTICE TIPS:
- It is recommended that sellers remove all of their possessions at the close of escrow or upon termination of a lease or seller in possession arrangement.
- If the parties allow the seller to leave the seller’s possessions at the property post close of escrow, agent should use the attached BRM form and advise the clients of the risks.
WEEKLY PRACTICE TIP: DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is an attorney-client privileged communication for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management LLP. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry but rather are intended to suggest good risk management practice.