If you need to move into the property before settlement, you can request early access. If the vendor agrees to grant you early access, a licence agreement will be prepared to detail your rights and obligations.
What is a Licence Agreement?
A licence agreement is a binding agreement between the vendor as the licensor and you as the licensee.
The vendor grants you a licence to access and occupy the property before settlement and you agree to pay the vendor a licence fee.
Generally, the party that requests for a licence agreement is responsible for paying the legal costs for drafting the licence agreement.
What’s in a Licence Agreement?
The Vendor may charge a licence fee for early occupation. This is generally payable by you at settlement.
Insurance and Risk
You must purchase insurance for the property prior to being granted access. The risk of any damage to the property passes to you from the date you begin occupying the property.
You must maintain the property in its current condition, except for fair wear and tear. This means you will not be able to make any additions or alterations to the property.
You will be responsible for all outgoings, such as council and water rates, from the date you occupy the property. On the settlement date, all outgoings will be adjusted from the occupation date.
You must arrange for any utility services to be connected and will be responsible for all usage charges from the occupation date.
Vendor’s Right to Inspect
Access to the property is granted to you under a licence. This does not create a landlord and tenant relationship (and therefore the relevant Residential Tenancy Act would not apply), and you do not have exclusive possession of the property. You must allow the Vendor or the Vendor’s agent to inspect the property with reasonable notice.
What do I need to consider?
Early access to the property does not mean that the ownership passes to you when you begin occupying the property. The Vendor remains the legal owner until settlement has been completed.
However, the property becomes your responsibility once the licence agreement commences. Before moving in, you should conduct your final pre-settlement inspection. The Vendor is not obligated to repair any damage after you have moved in.
W Legal Group can help!
Our friendly team of experts can assist with drafting the licence agreement for you. Contact W Legal Group to get started!