Occupational Rent

Once a sale agreement has been signed, the transfer process begins and typically takes 8 to 12 weeks. Ownership of the property concerned will pass to the purchaser on registration of transfer in the Deeds Registry (“Date of Transfer”). In most transfers of immovable property, occupation (the right to occupy the property) passes to the purchaser on the Date of Transfer.

In some cases however, a purchaser may negotiate with the seller to receive occupation of the property prior to the Date of Transfer. Alternatively, the seller may negotiate with the purchaser to remain in occupation of the property for a period after the Date of Transfer.

What is Occupational Rent?

Occupational Rent is the rent payable by the occupying party for the period of their occupation of the property while they are not the owner thereof.

If the sale agreement is silent on the amount of occupational rent to be paid, there is a risk of future conflict as one of the parties may be at a disadvantage when trying to negotiate occupational rent at a later date. We therefore recommend that the occupational rent be negotiated and recorded in the sale agreement before signature, even if the intention at that stage is not for either party to be in occupation of the property, while they are not the owner.

The clause in the sale agreement providing for occupational rent must also clarify who will be responsible for which costs. The municipal rates and taxes for example are usually paid for by the owner of the property and the consumables such as water and electricity are usually for the occupant’s account. Insurance should be paid for by the owner of the property to ensure that the property is insured against damage, usually caused by fires and floods for example.

It is in the best interests of both parties to clearly communicate their respective needs and expectations and to include these in writing when signing the sale agreement. This includes providing for occupational rent.

For advice on how to cover all bases regarding occupation and occupational rent in your sale agreement, please read more information on what conveyancing entails and contact one of our conveyancers today.