EARLY OCCUPATION AND WHAT TO LOOK OUT FOR TO AVOID DISPUTES AND PROBLEMS
Category Sound Advice
One of the most important decisions to make, when signing an offer to purchase, is when should the purchaser occupy the property.
The options are either on registration of transfer or a specific date, stated in the sale agreement. The most common choice is occupation on transfer (registration).
Many estate agents have different views about whether early occupation should be on transfer or a specifically agreed date.
The risks however of allowing your purchaser early occupation of your property before it has been registered into their name can cause unexpected problems and disputes. The following are just some of the things that can go wrong:
- The purchaser may find a defect in the property and refuse to proceed with the transfer until it is remedied (the seller will then be at a disadvantage because the purchaser is already in possession of the property);
- The purchaser may not pay occupational rental;
- The purchaser's financial circumstances/position may deteriorate or change and the bank may withdraw the bond;
- The purchaser may make structural changes to the property without the seller's permission;
- Something in the property (like a pool pump) may break and the parties will argue about who is responsible to repair it;
- One of the parties can die.
If your sale agreement is not worded clearly, the solution to the above issues may not be clear and this will cause a delay and might destroy the deal.
If the seller is considering allowing the purchaser early occupation into the property before the transfer, the seller can mitigate his/her risks by paying careful attention to the specific wording of the sale agreement to ensure that it is clear about the passing of risk, the duty to maintain the property, the apportionment of expenses, alterations/renovations and occupational rental. The agreement must be clear (or amended) before you let go of your keys.
Discovering defects before a transfer
With regards to defects in a property and the rise of consumer protection expectations, there are genuine benefits in making sure that the compulsory Property Condition Disclosure is taken seriously and is properly completed. Here again clarity and honest disclosure are necessary to minimise surprises.
If sellers try to repair all defects upfront, the transfer will be quick and trouble-free, as is required by the compulsory Property Condition Disclosure. A straightforward transfer far outweighs the cost and delay in having a dispute over whether the seller is liable to repair the defects or not.
Also, purchasers should make a very diligent inspection when viewing the property. They can take their experts to the property to inspect before they sign contracts. If defects are discovered before the transfer, there is enough time to have them repaired or at least agree to a provision that the cost of repair can be deducted from the selling price and "retained" as a provision by the conveyancer until liabilities and payment are determined.
Author: HP Steenkamp
