Whether on the selling or buying end of a property sale, it is imperative to familiarise yourself with the conditions that the offer to purchase stipulates.
South African law dictates that those who would like to sell or buy a property are required to reduce all contractual agreements to writing. The aim of this is to reduce the risk of any ambiguity during the transaction and to have a clear guideline as to what each party is entitled to and what they are responsible for. Since the Consumer Protection Act has come into play, contractual language has become easier to understand. However, that said, it is still vital that both the buyer and seller go through the offer to purchase and agree with all conditions and provisions in the contract before they sign it - especially when it deals with aspects such as occupational rent.
The clause relating to occupational rent is vital as it protects both parties. Essentially it ensures that the seller will be financially compensated if the buyer moves into the home before the transfer occurs. Equally, it will also provide financial compensation if the transfer takes place and the seller is still occupying the property.
The occupational rent clause is often overlooked because most buyers only plan to move into the home once the transfer has happened. In most instances, buyers want to avoid having to pay occupational rent and wait for the home to be registered in their name. However, sometimes life doesn’t always go according to plan. Buyers will often have to give notice at their current residence before moving to their new home. If notice is given and the transfer of the property is delayed, they could find themselves occupying their new home sooner than initially planned. In an instance such as this, knowing what the contract says about occupational rent will become are more important.
It is not only the buyer that could find themselves paying occupational rent. If the seller has sold their current property to purchase another and is waiting for the transfer to go through, they could end up staying in their current residence longer than expected and paying rent to the new owners. It is in these instances that knowing and understanding the terms of the occupational rent clause will allow both parties to know what is expected and not be caught unaware.
In the event of either possibility, it is imperative that the occupational clause in the sales agreement states the amount of occupational rent that should be paid. Even if the date of occupation is listed as the date of transfer, the occupational rent amount should still be in the agreement - this ensures that conflict or any misunderstandings are avoided. While the rental amount is ultimately the seller’s decision, both parties need to decide and agree upon the amount before signing the agreement. The amount should be market-related and ideally be enough to cover the bond repayment.
By understanding the sales agreement and its conditions, buyers and sellers can avoid any unnecessary conflict, which will make the entire process of buying or selling a home a far less daunting one.