select
|

The low-down on occupational rent

Whether buying or selling property, it is always vital to know exactly what all the conditions in the offer to purchase stipulate, says Adrian Goslett, CEO of RE/MAX of Southern Africa.
 
He notes that according to the law which governs property transactions in South Africa, those who want to sell or purchase a property are legally required to reduce all contractual agreements to writing. The aim of this is to mitigate the possibility of any ambiguity and to have a clear guideline as to what each party is entitled to and what they are responsible for.  “Since the introduction of the Consumer Protection Act, contractual language has become far easier to understand, however, it is still imperative that each party ensures that they have read and agreed with all the conditions and provisions in a contract before they sign it, particularly when dealing with issues such as occupational rent,” says Goslett.
 
He says that the occupational rent clause is essential as it is ultimately intended to protect both the buyer and seller. Goslett says that the clause will in essence allow financial compensation for the seller should the purchaser move into the home before transfer has taken place. It will also provide equal financial compensation to the buyer should the seller still reside in the home after transfer.
 
According to Goslett, while most property sale agreements will have a clause that deals specifically with occupational rent, it is often overlooked due to the fact that most buyers only plan to move into their new home once the transfer of ownership has taken place. “Most buyers intend to wait for the property to be registered into their name before moving in; however certain circumstances may arise where they are forced to move in before this happens. Often buyers will need to give notice on their current residence and will have to move by a certain date. It is not uncommon for delays to occur in the transfer process, which could see them living in their new place while it is still owned by the previous owner.  In an instance like this knowing what the contract says about occupational rent will become much more important,” says Goslett.
 
He notes that it is not only the buyer that could find themselves in the situation of paying occupational rent. The seller, for example, may have sold their property and purchased another and are waiting for the transfer on the new property. A delay in the transaction could see them staying on at their current residence for longer than expected and paying occupational rent to the new owners. While not ideal, it is in these instances that knowing and understanding the terms of the occupational rent clause will allow the parties involved to know what is expected and not be caught unaware. 
 
“If either of these circumstances occur, it is vital that the clause states the amount of occupational rent that will be paid by the relevant party each month. Even if the date of occupation is listed as the date of transfer, the occupational rent amount should still be put into the agreement in writing.  This will help avoid any misunderstandings or conflict by giving each party a clear indication as to what they can expect,” says Goslett. “Although it is ultimately the seller’s decision, both parties will need to decide and agree upon the occupational rent amount in advance of them signing the offer to purchase agreement. The amount should be in line with market-related rental amounts in the area or, as a rule of thumb, enough to cover the bond repayment on the property.”
 
Goslett says that understanding what is required contractually puts buyers and sellers in a more sound position when it comes to the property sales transaction. “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,” he concludes.


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 22 Jun 2018
      While estate agents can help the seller with correctly pricing the property and marketing a property to the right pool of potential buyers, at the end of the day it’s the impression that the property will make on buyers that counts the most.
    • 21 Jun 2018
      Anyone who’s ever been involved in a building project that’s gone wrong will appreciate the importance of adequate insurance cover in the construction industry.
    • 21 Jun 2018
      A recent news story about a blind tenant caught in a legal battle with his body corporate over letters and notices he was unable to read and consequently comply with has raised the question: what are the legal obligations for landlords with disabled tenants?
    • 21 Jun 2018
      A trend that’s taken the world by storm in recent years is that of hygge (pronounced: hue-guh), a Danish concept that is about creating intimacy, connecting with loved ones and taking pleasure in small, ordinary things.
    • 20 Jun 2018
      Buying or selling real estate isn’t as easy as it is portrayed sometimes, especially if there is a death of a party during the transaction which can make it awkward, tricky and inconvenient.
    • 20 Jun 2018
      With interest rates remaining at historic lows and banks continuing to compete for mortgage finance business, first-time buyers with funds at their disposal are currently well-placed to gain that initial foothold on the property ladder, particularly in the light of the slightly lower growth rates currently experienced in residential property values.
    • 20 Jun 2018
      The average size of bond granted in SA has grown 7,7% in the past 12 months to R934 000, according to BetterBond, the country’s biggest bond originator.
    • 19 Jun 2018
      In the current market, letting out a property can be a good option as rental demand remains strong, especially in the northern suburbs of Johannesburg. This is according to Chris Renecle, MD of Renprop. However he says that before homeowners let their property out, there are five key points they should make sure are covered before they market the property for rent and sign any lease agreements.
        
    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