select
|

What you need to know about occupational rent

Whether you are a buyer or a seller, it is vital that you are familiar with the terms and conditions stipulated in the property sales agreement, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.



South African law states that those who would like to either sell or buy a property are required to reduce all contractual agreements to writing. “The reason for this is to reduce the risk of ambiguity during the property transaction and so that each party has a clear understanding of what is required of them,” says Goslett. “Contractual language has become easier to understand since the Consumer Protection Act was introduced in 2011. However, it is still necessary for both parties to read through the sale agreement and agree to all its various conditions and terms before they put their name to it, especially when it deals with aspects such as occupational rent.”

The clause pertaining to occupational rent is crucial because it shields both the buyer and seller. It ensures that the seller is financially compensated if the buyer moves into the home before transfer. Conversely, it provides the buyer with financial compensation if the seller is still living in the property after the transfer has occurred.

“The occupational rent provision is often glanced over because most buyers only intend to move into the property once it has been registered in their name. However, things don’t always work out according to plan and buyers may find themselves in a situation where they are required to move into the property sooner than they initially expected. If a buyer has given notice at their current residence, and transfer on their new home is delayed for whatever reason, they could find themselves in occupational of the property before it is in their name. It is this exact situation that makes the occupational rent clause so important,” Goslett explains.

On the flip side, it is not only the buyer that runs the risk of having to pay occupational rent. The majority of homeowners sell their property to purchase another one. They too may have to wait for the transfer to go through on their new home while living in their current residence. If they are still living in their current residence when it is transferred into the new owner’s name – they will be liable to pay occupational rent. “While not ideal, it is in these situations that knowing and understanding the terms of the occupational rent clause that will allow the everyone involved to know what is expected and not be caught unaware,” adds Goslett.

Should either circumstance come to light, it is essential that the occupational clause stipulates the amount of occupational rent to be paid. Even if the date of occupation is listed as the date of transfer, the rental amount still needs to appear in the agreement in writing to avoid conflict or any misunderstandings. The seller will ultimately decide what amount the occupational rent will be, however, both parties must be in agreement before signing the document. The rental amount should be market-related and should ideally be enough to cover the bond repayment.

“Having an understanding of the sales agreement and its conditions will help sellers and buyers to avoid any unnecessary conflict, and will make the entire process of buying or selling a home far less daunting,” Goslett concludes.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 18 May 2018
      Home improvements are a great way to add value to your property, but not all of us have bottomless pockets for a full-on renovation. Lucky for us, there are plenty of affordable DIYs that can spruce things up over a free weekend.
    • 18 May 2018
      The need for large office spaces is slowly eroding as more and more employers choose to allow their staff to work remotely. As a result, the home business model has grown in popularity, with many new entrepreneurs choosing to start their business from home rather than in a business district. But, what are the legal implications of operating a business in a residential area?
    • 18 May 2018
      Proxi Smart Services Pty Ltd, a company that deals with the day to day administration of property transfers while the conveyancer attorneys perform the legal side of transfers, lost its bid for the court to allow them to do business in this regard.
    • 17 May 2018
      If you’re a first time buyer, then you are probably only just beginning to realize how expensive furniture can be. That three-piece lounge suite you’ve had on your “Dream Home” inspiration board probably seems like nothing but an unrealistic fantasy to you now. But, a little bit of financial discipline mixed with a dash of smart shopping can go a long way towards helping you furnish your fantasy.
    • 17 May 2018
      In recent years the demand for sectional title apartments – both for rent and to purchase - in Rivonia, which is considered to be one of the most affluent residential and suburbs in Johannesburg, has been incredibly strong.
    • 16 May 2018
      Nestled in the Cape winelands, Franschhoek boasts sumptuous offerings from local food artisans and manufacturers, with a recent addition – craft beer! Visitors to this famed gourmet region can now enjoy Franschhoek Beer Co’s premium craft beer in the middle of wine country, thanks to the brewery’s new restaurant, Tap | Eat.
    • 16 May 2018
      You have found your dream home, your offer was accepted and your bond approved, but now what?
    • 16 May 2018
      Solar energy has exploded over the last decade with the cost of solar panels decreasing, making solar more affordable than ever. Many homeowners have already invested in this to make their homes more environmentally friendly and sustainable, but if you are still investigating the options available to you, this article could assist you in taking that final step towards sustainable living.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK