A reader has asked the experts for assistance regarding the payment of occupational rental on a property he has bought.
The reader purchased a fixed property from a seller, an insolvent estate, late last year.
He says the agreement of sale specified that no occupational rental would be payable and it would appear that he took occupation before the date of registration of the transfer.
The transfer has taken longer than anticipated – six months have passed – and the seller is now demanding that occupational rental be paid.
See the reader’s question here.
Occupational rental is generally agreed on where the purchaser is granted occupation prior to transfer.
It is also paid when the seller remains in possession of the property after registration.
The party occupying the property is not the registered owner but simply a tenant and is therefore usually obliged to pay rental, as any other tenant would.
The timeframe for the transfer can usually be determined quite accurately and the parties involved can estimate the amount payable if one party takes occupancy on a date other than the registration of transfer.
In the current instance, the administrator of the insolvent estate probably preferred to have someone in occupation to prevent vandalism of the property.
The problem one has in a situation like this is that the agreement was signed at a time when the assumptions that were made were largely favourable.
It was probably convenient for the seller to allow early occupation and perhaps save money on things such as general maintenance and upkeep.
We aren’t told the reason for the delay but it was probably assumed that transfer would take place in the usual six to eight week period.
Now that the circumstances have borne out a different scenario, the seller is unhappy with the bargain he struck and wishes to alter the terms thereof.
Our law expects parties to abide by the provisions of the contract they conclude, subject to certain legislation such as the Consumer Protection Act.
The agreement would, most likely, include a provision not permitting the amendment of its terms without the written agreement of both parties.
Without such an agreement, the basic provisions should remain applicable.
The reader’s situation highlights the importance of agreeing to terms that cater for a change in circumstances.
In this instance, occupational rental could have been agreed upon at a low to fair rate, allowing some compensation to the seller.
The parties could even have agreed for it to become effective only if transfer took place beyond an agreed date.
Ask the YourProperty experts a question here.