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Occupancy prior to transfer is risky

There have been cases, when selling a property, where occupation has been given to a buyer and that buyer starts renovations or making changes to the property before transfer has taken place and, in one case heard of recently, before the bond had even been approved.

This should never be allowed, says Lanice Steward, managing director of Knight Frank Anne Porter. Occupation of a property should only be given to a buyer after all the suspensive conditions in the offer to purchase have been fulfilled. It is risky to give the purchaser occupation if conditions such as bond approval or any other finance condition (such as a guarantee, because even these can be reneged on) has not been fulfilled or been completed.

In addition, all transfer documents must be signed, the deposit must be paid on time and, if applicable, the outstanding balance between the bond and the purchase price must be given to the conveyancer to be held in trust, said Steward.

The seller must be protected against the buyer carrying out any renovations before the transfer takes place in the form of a clause in the sale agreement prohibiting him from doing so, she said. This is a standard clause in a number of purchase agreements, but the seller must check that it is written in to protect himself.

"If a purchaser wants occupation prior to transfer, extreme caution must be taken and certain "boxes need to be ticked"," said Steward. "In my experience, when the offer to purchase is "too good to be true" in that it is above the asking price and has come through in a very short time after putting the house on the market, it sometimes is.

"If the buyer starts making changes without any form of security for the seller, he must contact the conveyancer and the agent immediately, the buyer must be pushed to pay in some form of collateral so that if the deal goes "belly up" there are funds available to return the house to its original state," said Steward.


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