Lake Properties Lake Properties
Lake Properties Lake Properties
Here's a more in-depth explanation of why it is crucial to receive the full purchase price and all transfer fees before giving occupation of a property to the buyer, especially in the context of real estate transactions:
π 1. Legal Ownership and Risk Exposure
✅ Ownership Remains with the Seller
Until registration of transfer is completed at the Deeds Office, the legal owner of the property is still the seller. Allowing the buyer to take occupation before payment creates a mismatch — the buyer has use of the property, but the seller bears the legal responsibility.
⚠️ Risk of Damage or Non-Payment
If the buyer takes occupation before paying in full and damages the property, becomes insolvent, or refuses to proceed with the transaction:
- The seller could face costly repairs.
- Evicting the buyer could require a court order, resulting in time delays and legal costs.
- The seller might need to resell the property, possibly at a lower price, and may incur losses on holding costs (utilities, levies, rates, etc.).
πΈ 2. Payment Guarantees the Buyer’s Commitment
Receiving the full purchase price upfront:
- Confirms the buyer's financial readiness and seriousness.
- Ensures that the seller doesn’t give up possession without being compensated.
- Secures the deal before the buyer gains any benefits (like moving in).
Buyers can sometimes overextend themselves financially — if they move in before payment and then fail to come up with the remaining funds, the seller could end up with an unpaid, occupied property.
π️ 3. Transfer Fees and Legal Costs Must Be Paid to Avoid Delays
Why Transfer Fees Matter:
- These fees (conveyancer’s fees, Deeds Office fees, transfer duty, etc.) are needed for the legal transfer of the property into the buyer’s name.
- If not paid in time, registration is delayed, meaning the property stays in the seller’s name longer than expected.
- This can lead to extra holding costs and possible penalties for the seller (like continued municipal rates, levies, or bond interest).
π 4. Occupational Rental and Agreement Issues
If early occupation is allowed, the seller should charge occupational rent — but:
- If not properly agreed upon in writing, this can become a source of dispute.
- The buyer may refuse to pay rent or damage the property, leaving the seller with limited legal recourse without a well-drafted agreement.
- In case the buyer later cancels or defaults, the seller may face a long eviction process and a property in worse condition.
⚖️ 5. Contractual Compliance and Standard Practice
Most sale agreements — especially those drafted by attorneys or estate agents — include a standard clause like:
"The purchaser shall only be entitled to occupation upon full payment of the purchase price and all required costs associated with the transfer."
Allowing occupation beforehand may constitute a breach of contract, weakening the seller’s legal standing if the buyer defaults.
π 6. Practical Examples of the Risk
Example 1:
A buyer takes early occupation but later struggles to get financing or decides to cancel. The seller:
- Cannot immediately re-sell the property.
- Must initiate legal proceedings to remove the buyer.
- May lose rental income during that time.
- May face property damage with no compensation.
Example 2:
A buyer occupies a property, but delays paying transfer duty to SARS. The transfer cannot be completed, even though the buyer is living there. The seller continues to bear legal obligations and financial burdens.
✅ Best Practice Summary
Before giving occupation, always ensure:
- The full purchase price is paid or secured (e.g. via bank guarantees).
- All transfer and legal fees are paid to ensure registration goes smoothly.
- If early occupation is unavoidable, use:
- A formal occupational rent agreement.
- A deposit or security.
- Specific conditions and dates with legal backing.
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