Speak to experienced agent

The buying and selling of residential properties is something most people only experience a hand full of times and are therefore largely unaware of the many pitfalls that can emerge during the process.

Having an experienced agent with hundreds of transactions and many years of experience as a trusted adviser can be priceless for a seller. In a typical property transaction it is the agent that often makes the difference between an apparently seamless transaction and a process plagued by problems and frustrations. Speak to an experienced agent and they will typically voice the same response - "A particularly bad idea!"

In over 23 years of selling high-end residential real estate both as a broker and a developer, I have seen almost every trick in the book.

There are several key things to bear in mind as a seller when considering early occupation as part of your negotiation. The first relates to the financial implications to the purchaser of having the privilege of occupation of a property they have not as yet paid for.

It has to cost more that the status quo of having their funds invested with the transferring attorney earning interest for their account, or in the case of the proceeds being secured by means of a mortgage bond, it has to cost more that the monthly repayments on the pending debt. Why Because as a seller, you want to remove any incentive to the purchaser of delaying transfer.

In addition to the occupational rental amount there are other costs associated with the use of the property that have to be carried by the purchaser. These would be the cost of electricity, water & sewer charges, municipal refuse charges, gas and others that may or may not apply such as the garden and pool service.

In some instances I have seen sale agreements also provide for the purchaser to pay the municipal rates and taxes and insurance on the home from the date of occupation. The rule here is that it has to cost the purchaser a bit more to have the opportunity to take early occupation than a standard rental would on the same property. This leads to the second aspect, which is the legal responsibility. Until registration of transfer the seller will remain responsible to the Body Corporate, the Home Owners Association and the local authority.

Failure to comply with the rules or pay any amounts due by the occupant still remains the responsibility of the registered owner. Insurance of the property, including public liability cover remains a consideration.

I have seen this scenario play out with the sale of a new apartment where the incoming purchaser started to make significant changes to the property prior to transfer and in making these changes, the property became less desirable and marketable in general. As it happened the purchaser was unable to finalize the transaction and the developer inherited a modified property worth less and harder to sell than the original design.

Early occupation can present a seller with many risks and contracting parties should be made aware of these by their representative agents.