When To Take/Allow Occupation Upon The Sale/Purchase Of A Property
This is one of the most important (yet often the most neglected and misunderstood) decisions to make at the time of signing your offer to purchase!
The two options are:
ON TRANSFER
ON A SPECIFIED DATE
Occupation occurs on the day that ownership is transferred from seller to buyer at the deeds office.
Seller and buyer agree on a particular day by when the seller must move out, and the Buyer gets the keys.
Occupation date is a moving target.
Occupation on transfer is a “moving target”. Nobody has full control as to when registration will take place, and no amount of planning can guarantee date of transfer.
Occupation date is fixed
Definite furniture removal bookings can be made, furniture storage units would not be necessary and everybody would know exactly where they are going and when.
Conveyancing Delays
Transfer can be effected by problems arising during the process at Conveyancing level.(eg clearance certificates, unpaid bills. Late estates do generally take longer)
Conveyancing Delays
Have no effect
Deeds Office Delays
Transfer can be effected by delays at the deeds office (CoVid, strikes etc).
Deeds Office Delays
Have no effect.
Costs Paid
Sellers have the comfort of knowing that the purchase price and costs have been paid.
Costs Guaranteed
Sellers should insert a clause specifying that the purchase price and costs must be secured (guaranteed) before allowing occupation.
Defects – benefit to sellers
Purchasers may believe that by taking occupation on or after transfer that they do not have the opportunity to find all the possible defects on the property and to discern the true condition of the property.
The reality is that they do have every opportunity prior to signing the OTP.
It is clear that purchasers should be much more rigorous in inspecting the property before deciding to purchase.
Customary Practise dictates that purchasers must make a thorough inspection of the property.
By signing the Compulsory Property Condition Disclosure, the buyer has accepted all defects that have been disclosed by the seller, and this is where they would add their own concerns that would need to be addressed by the seller at the time of him accepting their offer.
Defects – Benefit to buyer
If the date is before transfer, some sellers believe they have a less chance of negotiating or disputing claims for the repair of defects.
The reality is that with the rise in consumer protection it is compulsory that a full Property Condition Disclosure must be signed by the seller and subsequently checked and agreed to by the buyer at the time of signing the OTP.
Discovering defects before transfer:
There are very real benefits in making sure that the compulsory Property Condition Disclosure is taken seriously and is properly completed. Here again clarity and an honest disclosure is necessary to protect both parties
See more on latent and patent defects
Stalling and manipulation of transfer
Sellers and buyers may attempt to manipulate the day of registration to suit a particular need eg a sudden holiday or a delay in the process of back to back transfers (sellers buying their new property, and buyers selling their previous property). This stalling of transfer could be from a few days to a few months.
It has happened that the Buyer arrives at the gate on the day of transfer with all his furniture, just to find the seller is not ready and won’t let him in.
Change of occupation date by agreement
Any change in the date of occupation would have to be fully agreed to and signed by both parties.
This is where the estate agent needs to assist the parties to structure the deal correctly and effectively.
It is a fact that an agreed occupation date before transfer, gives everybody clarity and prompts people to plan ahead. It keeps everybody calm and far outweighs the costs of occupation before transfer (occupational rent).
Graeme Bowring of Property At Bowring says in these difficult times where transfer can take between 2 months and 6 months, if the parties are uncertain as to when they may be able to move e.g. on a conditional offer (where the sale of the buyer’s current property is a condition of sale) he would make it “on transfer”. However, he puts under the conditions that this may change with mutual consent during the process. He says it is important to negotiate the amount of occupational rent that will be paid at the time of signing the Offer to Purchase.
Once the obstructing hurdles have been overcome and as transfer becomes more tangible, both parties will then sign an addendum specifying the exact date of occupation!
In the case of “On Transfer” occupation dates, Graeme strongly suggests the parties to choose a Conveyancing Attorney that gives weekly progress reports so that everybody can plan ahead towards the expected date of transfer.
A THIRD APPROACH
As a third approach, the parties could agree to move exactly 2 weeks (14 days) after transfer. This allows everybody 2 weeks from the date of transfer to plan their move, knowing that transfer has been taken care of and monies have been paid and received. The seller would have to pay 2 weeks occupational rent to the buyer for his home that he no longer owns, however the timing is set. Many sellers opt to go this route as they do see the benefits of this option.