Buying and selling a property can be daunting. There is always the issue of the “unknown” that both parties have to deal with. For the seller, it’s the issues of when their property will sell, for how much, and what the terms will be.
For the purchaser, it’s equally as stressful. How much will they have to pay? What deposit will be required? What terms will the seller accept? Will they get their mortgage bond and what will the interest rate be?
The good news is that, within a few weeks of an Offer to Purchase being signed and accepted, the majority of these questions have been answered. There are, however, additional issues that both parties need to consider. Proper forethought can reduce the chance of nasty surprises later.
For the seller – what additional costs are you going to incur in providing the various certificates of compliance that are required in law? Whilst there is no avoiding these costs, knowing in advance what you will be in far is better than having to deal with the shock of an unbudgeted expense later. Some certificates of compliance are valid for 6 months – so if you are selling an older property and you suspect a large expense looming – consider having the inspection done up front and negotiate with service providers to do the work at a better pricing.
We often see the frustration experienced around occupation dates. There are generally 2 options – occupation on transfer, or on a specified date. If you’re considering moving into the property yourself then I would recommend setting a specified date. Transfer very rarely goes through on the date specified on the Offer to Purchase.
If you’re expecting to move in on transfer and transfer is delayed, that means you have to change your movers, possibly find alternative accommodation for an unknown time, and handle all this additional (and avoidable) stress. The same applies to the sellers.
In such an instance the Offer to Purchase would specify an occupation date and an occupational rental. Here again, be sure you understand what your obligations are. Some sales agreements state that “risk” passes to the purchaser on Occupation or Possession. That means the purchaser is responsible for rates and taxes, levies, property insurance, and all municipal costs from that date.
Other agreements will state that the risk remains with the seller. Both are acceptable, but naturally the occupational rental amount will differ considerably depending on whether or not all the costs associated with risk pass to the purchaser on Possession or Occupation, or not. So be sure you know what you are signing and that the occupation rental amount takes these costs, or the lack thereof, into consideration.
When it comes to special conditions of any kind, ensure that there is sufficient time for the relevant party to satisfy them before Occupation or Risk passes to the purchaser. If not, and the sale were to fall through, there is huge inconvenience and wasted costs for all involved.
So be sure you know what you’re signing, and reduce the grey areas as much as possible up front.
Principal of Harcourts Platinum
Director of Harcourts South Africa