Signing an Offer to Purchase is one of the final steps in buying a property. Once this document has been signed, the buyer is legally bound to purchase the property within the expiry period of the Offer, with both the buyer and seller being bounds by its terms and conditions.
Before you finalise your Offer to Purchase as a buyer, or accept one as a seller, make sure that you have read the occupational rental clause and that it meets with your approval, as this can become a serious issue for both parties if the property transfer takes longer than expected.
What is Occupational Rental?
When a property changes ownership, the seller usually agrees to vacate by a certain date – usually the date of transfer. However, because transfers don’t always go through as quickly as they should you may find yourself in a situation where you’ve bought a home but cannot move in because the property has not been transferred to your name yet.
In situations like this, occupational rental is a convenient agreement that allows both buyer and seller to move on while they await a property transfer. The seller may agree to vacate the property before the agreed date, and will charge the buyer a rental amount until the transfer goes through. This amount should be specified in the offer to purchase to avoid any confusion.
The Occupational Rental Clause
When you draft your offer to purchase, remember to include an occupational rental clause which states how much occupational rent you would be paying and for how long – ideally the period of time should never go beyond the date of transfer. Since the seller has recently sold the property, he or she may be willing to accept a lower rental figure than the property would usually attract. Once the Offer is agreed to, you’ll have the comfort of knowing that you’re able to move in to your new home even if the transfer is still pending.