Occupation on a date or on Transfer
Category Blog
As the process of simplification continues to unfold globally, we have found that about 70% of property purchase contracts set occupation down on transfer. It's easier to explain and it seems simpler. Once you own the property you may occupy it! Ironically it leaves an important clause to still be negotiated down the line. Is this an improvement on the old protocol which was occupation on a date agreed by the parties?
In my experience over decades of home marketing, it is not.
The normal process
In the normal sale process, the deposit is made within days of the contract signatures. Securing a bond will then take about three weeks. Guarantees will follow in about 45 days from signature, which secures the payment. A date for occupation should then be negotiated rather than the current trend of providing occupation on transfer. Occupation on an agreed date focuses everyone's thinking and provides pressure on the parties to attend to the detail timeously. e.g. FICA documents, house plans, compliance certificates and clearance certificates (i.e. on municipal rates, electricity and gas)
The guarantees are the 'green light' for the whole process to roll out. And they don't simply happen. The conveyancer and the estate agent need to push - and the buyer should push even harder.
The occupation date is the epicenter of the whole process. If occupation is scheduled on transfer date, the whole procedure becomes a moving target.
Most important of all is that the buyer must come up with the money (guarantees) on time. If he or she drags their heels in doing so the entire process becomes compromised. Occupation on transfer allows these delays to happen more easily.
Response to pressure
It is unfortunate that, in these days, virtually nobody responds to anything until there is pressure. As a result, far too many home buy/sell transactions don't go through timeously. In days gone by far fewer deals were delayed in this way.
What seems to be overlooked in this day and age is that occupation dates cause people to make plans.
If you are buying a house and moving in on, say, the 12th of March, you will have cleaners and moving trucks lined up. You will be so proud of your purchase that you will tell your friends and family that you are having a housewarming on the 16th of March.
Meanwhile, you are simply paying a market related occupational rent until the deal goes through. You are not even paying rates and taxes - the seller does that. So, you are enjoying the benefits of the property without being out of pocket because you don't yet have to pay your bond.
Finally, and most importantly the transaction goes through sooner to everyone's benefit.
Author: Ronald Ennik
