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Here’s what you need to know about occupational rent agreements

Moving day.resize

It takes, on average, 12 weeks for a property to be transferred into your name. This means that, depending on when your own home was sold or your lease expired, you run the risk of being “homeless” for a couple of months.

Seemingly the most obvious solution in this case is to take early occupation of your new home. But, warns Bruce Swain, CEO of Leapfrog Property Group, you need to remember that there is a difference between taking ownership and early occupation.

“Once a buyer has taken ownership of a property it legally belongs to them to do with as they see fit,” explains Swain. “Taking occupation merely means that the buyer is allowed to live in the home while the sales transaction is concluded.”

It’s a timing thing

Watching the clock

Deciding to take early occupation is not a decision to be taken lightly, it has significant financial impact. According to Swain occupational rent is usually set at 1% of the purchase price, per month and may not be the most cost-effective option. However, if you are moving across country or when taking into consideration the fact that you will be eliminating the need to essentially move homes twice in a short period it could make sense.

It isn’t always just a case of buyers who doesn’t have time on their side. According to Swain professional commitments and renovations in their new homes are often reasons behind the seller needing a month or two extra in your new home. Should you be able to accommodate the seller, you will be the one earning occupation rent. In either event it is important to understand the process and get the details right to avoid disputes at a later state.

Taking care of the details

the details of an agreement

“Most importantly a seller and buyer must agree on a moving date, as with a normal rental contract,” recommends Swain.

Who pays for what?

The next important thing to get clarity on is who will be paying for what. In most cases the municipal rates and taxes are paid for by the property owner (whether that is the seller, or whether the transfer has gone through and the buyer is now the owner) and the consumables like water and electricity are paid for by the occupant. “Clarify this before occupation takes place to avoid later conflicts,” says Swain.


It’s best to stipulate that the seller will continue their homeowner’s insurance until the transfer of the property is complete, the property is then definitely insured against natural disasters like fires and floods while the sale is finalised.

What’s yours is yours, and mine is mine

Swain says that it is best to ensure that the buyer cannot store items at the property while the seller is still living there or the seller, once the buyer has taken occupation so as to avoid damage disputes that may arise.

As with the rest of the buy/sell transaction it is essential that both parties fully understand the occupation agreement, and have clear expectation and communicated needs for the process to be successful. “Taking extra care to ensure these requirements are in place will avoid potential conflicts and complications well in advance,” adds Swain.


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