While there are several circumstances that lead to the need for a use and occupancy agreement, the most common thing is that the lender is simply not able to close the mortgage before the deadline. Another common problem is a delay due to the construction of new buildings or when a house is significantly renovated. Buyers should be cautious in these circumstances, as if the delay in closure is due to construction, it is very likely that the seller does not have an occupancy permit issued by the city or the City; Therefore, in these circumstances, an occupancy and occupancy agreement would likely constitute a violation of the law, as it is illegal to be in a property that does not have an occupancy permit. The purpose of the so-called “use and occupancy” contract or leaseback is to avoid the creation of a lease and the associated legal rights and obligations complex. To achieve this objective, the agreement between the parties must create a simple license for the use and occupancy of the premises and not a form of rental. “While a lease agreement generates and transfers interest in the land and has an exclusive right of occupancy, a licence does not grant ownership, but only the right to use the land.” The distinction between the right to “own” the land and “the right to use the premises” may seem difficult – because this is so. To clarify the distinction, it may be useful to bear in mind that a “licence” (in the legal sense of the word) can apply to a wide range of circumstances – from the right to use the space at a gas station to sell Christmas trees to the right to enter a theatre awarded by a ticket. Another example is a client of a licensed homeowner who has been asked to use the premises for specific purposes. B for example houses for weeks, while the owners are on vacation. Obviously, a custodian is not allowed to occupy the premises exclusively. It is important to understand that this agreement is not the same as a lease.

While it is best to let a lawyer or real estate agent explain the differences between the two, it essentially means that buyers are not considered tenants.