PROPERTY NEWS - The payment of occupational rent is a standard clause in almost every property sales contract, and yet it is also one of the more common causes of contention between buyers and sellers.
Confusion abounds over who is responsible for what, and when these payments should come into play, and disagreements over the details can and have caused many a sale to fall through.
Occupational rent is also known as occupational interest, designed to protect both the buyer and the seller. It can apply to freehold and sectional title purchases, whether you’re buying from an individual or off-plan from a developer, and should be carefully considered and negotiated before signing an agreement of sale.
Form of financial compensation
Occupational rent typically comes into play when a buyer moves into the property before transfer and registration has taken place, or a seller remains in occupation of the property for a period after that point.
Form of financial compensation
Occupational rent typically comes into play when a buyer moves into the property before transfer and registration has taken place, or a seller remains in occupation of the property for a period after that point.
Essentially, it’s a form of financial compensation for the use of a property that you don’t own – it’s similar to, but not quite the same, as being a tenant and paying rent.
The differences between occupational rent and ordinary rent lie in the expectation of a change of ownership, and the fact that it occurs as the result of a sale.
The differences between occupational rent and ordinary rent lie in the expectation of a change of ownership, and the fact that it occurs as the result of a sale.
Occupation rent and ordinary rent for the same property should, however, be very similar figures, and if this isn’t the case, the affected party could try to negotiate a better deal before signing the agreement of sale.
