Boy can a property purchase be a minefield!

As I mentioned previously, my wife and I have just bought a house and, leaving aside the cost of the house and the hoops we have jumped through to move the process along, there have been a number of hazards along the way.  I think it is fair to say that, for the most part, people tend to focus on the events leading up to the signature of the offer to purchase (also your purchase agreement) and the big move.  What about all the fine print that you wouldn’t expect in your agreement and the mines scattered in between all the innocuous sounding phrases and terms?

One of the clauses to pay careful attention to is the clause dealing with your occupation date, particularly if you are the seller in the transaction.  A clause which will tie into the occupation date is the clause dealing with occupational rent and something to be aware of as the seller is that the seller could wind up paying occupational rent to the purchaser if the occupation date is after the date of transfer.  It is a good idea to set the occupation date to date of transfer or even earlier (the difficulty is that it is not easy to accurately predict when the property will be transferred).

As a buyer, carefully check the clause dealing with occupational rent and make sure that it doesn’t jump up and bite you down the line.  I spoke to the conveyancer handling our transfer today and she pointed out that occupational rent is usually payable for the month starting with the occupation date in advance.  This does not necessarily mean the month is a calendar month so if you decided to move in the middle of the month when movers are cheaper, you could be on the hook for a full month’s occupational rent up front rather than the pro rata share you may have thought you would be liable for.  In addition the occupational rent may be payable at the beginning of the month, before you actually move in.  You may want to amend such a clause to provide for occupational rent to be paid in respect of a calendar month and for pro rata payments if you don’t move in on the first day of the month.  Perhaps also give some thought to paying your occupational rent as you move in.  My conveyancer recommended taking payment of the occupational rent from the person who will be moving into my flat when I hand over the key.  This is prudent advice.

Something else I discovered is that transfer attorneys generally call for payment of the transfer duty up front as payment of the transfer duty to the South African Revenue Service is required for a transfer duty receipt which is, in turn, a requirement for the filing of the documents at the Deeds Office.  Transfer duty can be pretty steep if your purchase attracts transfer duty (the thresholds were changed recently by the Department of Finance) so either put some cash away if you can afford it or speak to your bank.  If the bank has made provision for your costs in the finance it is providing you with ask it to pay the transfer duty to the transferring attorneys upfront.  That money would be paid across anyway.  Whatever you do, be careful about obtaining bridging finance from institutions other than your bank.  Some institutions charge very heavy interest and although you require the finance for a very short time period, it can add an unwanted expense to your purchase.

There are a host of issues which you should be aware of, whether as purchaser or seller, and it is a good idea to let your own conveyancer review any agreement you intend signing.  The downside could be pretty dark.

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