A reader has already paid R450 000 of the R550 000 owed for a fixed property he is buying and wants to know if the seller can charge him occupational rental until the balance has been settled.
Already in occupation of the property, he says the seller wants him to pay R5 500 a month while the balance of R100 000 is paid off in instalments.
It appears the reader and the seller of the fixed property have entered into an agreement whereby the purchase price for the fixed property is payable in instalments.
A sale of land where the purchase price is payable in instalments is permitted under the Alienation of Land Act.
See the reader’s question here.
The starting point, however, is section two which states that no sale of land shall be valid unless it is contained in a deed of alienation signed by the parties.
It is thus clear that the sale in this instance must be reduced to writing, as is the case generally with a sale of fixed property.
Further legislation prescribes a number of provisions the contract is obliged to contain.
These include the purchase price, the due date of each instalment and various provisions relating to costs, transfer and the like.
Importantly, one of the provisions to be included in the contract deals with the dates and conditions on which the purchaser shall be entitled to take possession and occupation of the land.
It is quite usual for an occupier of a fixed property, in anticipation of gaining registration of transfer of that fixed property, to pay an occupational rental to the seller.
There is no indication in this instance as to the conditions upon which occupation was already given to the reader.
However, it may be a case of the seller wishing to unilaterally impose certain conditions on the reader.
Alternatively, the reader may be late or short on the instalments, thus lengthening the ultimate period of payment, which will be unsatisfactory for the seller.
The seller may feel that he is entitled to additional compensation under these circumstances.
The reader may feel that the monthly instalment payable constitutes a ‘rental’ of sorts, but, logically, this cannot be the case.
Unless there is an agreement to the contrary, a sale of fixed property by instalments is not necessarily intended to be a “rent to own” scenario.
Accordingly, in the absence of an agreement to the contrary detailing the conditions when occupation must be given, the seller or tenant could continue to occupy the fixed property in anticipation of the fulfilment of the terms in the instalment-sale contract.
In the event of it being the reader who is in breach of the contract, the act says the seller must notify the reader of this breach and must demand that he rectifies it in no less than 30 days.
The seller should also indicate to the purchaser what steps he intends to take should the purchaser fail to rectify the breach.
Accordingly, if it is the seller’s intention to punish the reader for any breach by way of occupational rental, this is not permitted by the act.
In actual fact, in the case of breach, it provides for remedies such as the enforcement of the contract, its termination or an action for damages.
The reader should examine the contract concluded with the seller in respect of the fixed property to determine the conditions applicable in respect of the occupation of the land.
The contract may specify the remedies available to the seller if the reader is in breach, together with any terms and conditions which must be specified under the act.
As an observation, it would be prudent for the reader to ensure that the contract has been recorded by the registrar, this being the duty of the seller.
If, however, the seller fails to do so, the reader, as the purchaser, may cause the contract to be so registered.
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