Understanding what occupational rent is and how it works
According to David Jacobs, Gauteng regional sales manager for the Rawson Property Group, the occupational rent clause is one of the most frequently misunderstood parts of property sales agreements.
Occupational rent is a very important part of a property sales contract, offering protection to both the buyer and seller in case of unexpected changes to the transfer timeline.
Ownership and occupation of a property are not the same thing. Occupation takes place on a specific date agreed on by the buyer and the seller. Transfer of ownership, on the other hand, can be affected by conveyancing challenges or delays at the Deeds Office and can be difficult to pin down to a reliable date in advance.
As a result, Jacobs says it’s not uncommon for buyers to move into a property before the transfer is complete, or for sellers to remain resident for a while after ownership has been transferred. This is when occupational rent comes into play.
Jacobs joins John Perlman to expand on the topic.
It is often misunderstood I think because upfront agreements aren't really made and people don't understand what it actually means.David Jacobs, Gauteng Regional sales manager - Rawson Property Group
When the sale of a property takes place, it's really impossible to understand when transfer of a property takes place... so that makes it quite complicated, because, at some point in time, someone has taken up occupation and the legal occupation has changed and there's a rental amount payable for that period until transfer takes place.David Jacobs, Gauteng Regional sales manager - Rawson Property Group
Listen to the full interview below...