People often ask themselves, what does interim mean? By definition, interim means a break or pause in a particular activity. As an adjective, interim means a temporary, provisional, or short-lived measure until something enduring replaces it. Interim as a noun relates to a period of the intervening time.
Suppose you wish to obtain a short-term mortgage loan to secure a real estate transaction. You want to buy your next home, but you haven’t received the proceeds from your first home’s sale yet. In that case, you’d be applying for an interim loan.
Under such circumstances, real estate interim financing defines the process of acquiring a temporary loan. Typically, interim financing is applied when homebuyers wish to compensate for the missing amount from the second property’s purchase price until they receive the earnings of their first sale. Thus, interim real estate finances translate to buying time.
A borrower can also choose interim financing because their budgetary strength is momentarily insufficient to get advantageous financial terms from a bank. They can even apply for a temporary loan with bad credit. In other instances, the borrower’s revenue-producing property, which functions as collateral,doesn’t hit the spot to get an attractive loan. Undoubtedly, interim loans presuppose paying special interests.
Interim use in real estate terminology defines a property’s temporary use until local authorities reach a formal zoning ordinance. In other words, an interim use is a real estate’s nonconforming use.
Suppose the new homebuyers will want to move into their new house sooner than the close of escrow. At the same time, the seller is still the property’s legal owner. Are the new occupants allowed to do that? They can reach a consensus and settle with an interim occupancy agreement. According to this contract, the seller agrees with the buyer moving in earlier. Like a lease’s structure, the interim occupancy agreement outlines each party’s responsibilities and the buyer’s extra charges for the period before the closing day.
However, the seller’s expert local real estate agent must be on top of their game and protect their client’s interests. Unfortunately, unforeseen accidents can occur that potentially ruin the property or valuables within said real estate. Let us stress one fact! Though parties sign the agreement, the subject or endurer of the financial loss can shift theirresponsibility to the other party during this interim period.
Accidents during escrow can be messy. For example, imagine a buyer hoping to move to the new home two weeks before escrow. However, the seller agrees for the buyer to carry only their assets into the new property’s basement. Naturally, they sign the interim occupancy agreement beforehand. Then comes the kicker. A water pipe bursts on the second story, inundating the entire premise and damaging the buyer’s stored assets. Now, they intend to sue the seller.
Let’s remind you that even more severe misfortunes can happen, resulting in deaths.
On the one hand, the legally-binding agreement mentioned before comes in handy, explaining all the clear accountability. On the other hand, many civil litigations ensue due to unpredicted accidents. For this reason, and though it may seem harsh, sellers should hand over the keys when the buyer becomes the legit homeowner. It’s called playing it safe.