Learn about occupational rental and how it operates.

Posted On Monday, 11 August 2003 02:00 Published by eProp Commercial Property News
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Learn about occupational rental and how it operates both buyers and sellers often have queries about occupational rental when concluding a property transaction, reports Pam Snyman, trainer at Pam Golding Training Academy

Ronald Ennik"While possession of a property creates the right to control the property legally, occupation provides the right to control the property physically," Snyman explained. "If occupation of the home purchased takes place before the transfer has gone through, the buyer pays occupational rental until the date of transfer. Conversely, the seller could be the one who pays occupational rental if the date of occupation by the new owner is after transfer takes place. "While it is preferably referred to as 'occupational rental', the term 'rental' is used loosely in this instance as it is an 'occupational consideration'. However the term 'consideration' is not widely used.

There is a difference between occupational rental and rental when one is renting a property," said Snyman. When renting a property, all the rights of being a tenant apply and unless otherwise stated in the rental agreement, common law provides that the property can be sublet by a tenant. In the context of occupational rental, the Deed of Sale must state that no tenancy will be created and therefore the person paying the occupational rental has no right to sublet the property.

Ronald Ennik, chief operating officer of Pam Golding Properties, who also heads PGP's Gauteng region, says the occupational rental should not be a point of negotiation between buyer and seller. "It is vital that the occupational rental set should be market related, that is what would be considered a fair rental rate. It is unreasonable if a high rental has been set so the seller may recover the costs of a high outstanding bond on the property. What if the seller then starts to drag his heels and delay the property transaction? Then the buyer who is paying occupational rental is put in an unreasonable situation." Ennik says the occupation date must be recorded in the deed of sale and is included by the buyer in the offer to purchase.

Occupational rental should be paid monthly in advance and refunded pro rata if the transfer goes through in the middle of the month or at any other time prior to the month end. It is not the estate agent's responsibility but should be calculated and collected by the conveyancing attorney who is processing the transaction between the seller and the various attorneys.

Last modified on Monday, 26 May 2014 12:12

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