Q: We are selling a house in Maryland and will be moving to another house shortly. Our buyers have not yet received their loan commitment, but we feel confident that they will get it soon. Our buyers would like to move in before settlement, and we are willing to accommodate them. However, we don't know the legal ramifications of such a transaction.

A: Permitting buyers to move in before settlement can be very dangerous. First, this gives them an opportunity to find all sorts of things wrong with the house, which may be used against the sellers at the settlement. Second, there are insurance matters that have to be considered, since you would no longer control the property.

If fire breaks out, for instance, whose responsibility is it?

If you are prepared to let your buyers move in before settlement, you should draw up an agreement that contains at least these points:

* The buyers agree to place the balance of the down payment with the title attorney or the title company, to show good faith. If, for any reason, the purchasers do not, actually complete the settlement, the agreement should spell out that all or part of the deposit will be forfeited at the option of the sellers.

* The buyers can inspect the property before they move in and will accept the property in its present condition the day they move in. That means the buyers will not be permitted to raise questions about the condition of the property. For all practical purposes, it will be treated as if settlement took place at the time of occupancy.

* The buyers are obligated to keep the property in the same condition, with reasonable wear and tear, and to maintain the heat. The buyers are also obligated for the utilities.

* The sellers will be permitted to inspect the property occasionally until settlement, during reasonable hours and on reasonable notice.

Finally, if at all possible, a date should be set for the actual settlement.

If you are working with a pre-occupancy agreement, keep in mind that it is a legal document that spells out the terms and conditions for the buyers to move in before settlement. The sellers should make it very clear that this is not a lease, and the buyers should not be considered tenants.

Otherwise, the sellers may find that the only way to get the buyers out is to go to landlord and tenant court, which is expensive and time-consuming.

I am personally opposed to allowing a buyer to move in before settlement. However, there may be instances where it is in everyone's best interest to permit it. But be cautious and careful about it.