New homeowners who take occupation of their properties before transfer of ownership is registered should hold off on making renovations or alterations.
Gerhard Kotzé, managing director of the RealNet estate agency group, says they should not start work until the transfer is completed.
Many home sale agreements provide for the buyers to take occupation after they have been granted a home loan and have provided financial guarantees to the sellers’ attorneys. But if a new owners starts work on the property and the transfer falls through, they stand to lose thousands of rand.
“This is because most sale agreements stipulate that if this should happen, the property that has been occupied by the buyer must be returned to the seller in the ‘same condition’ as when it was occupied.”
Kotzé says there are several common reasons why the transfer of ownership might stall, or even be cancelled. The buyer who was given occupation of the property before the registration of transfer is not legally a tenant, so he or she will not be able to claim compensation for any improvement made during this period, or for any work done to put the home back the way it was.
“Buyers who have been too quick to begin home improvements could find, for example, that roofs or walls have to be repainted their original colours, that a hole dug for a new pool has to be filled, or that the extra parking space they created has to be turned back into lawn.
“Alternatively, they may have to finish, and pay for, projects they have already started without any compensation from the original owner.”
New doors and windows installed to improve security or let in more light may have to be left in place, for example, because removing them would leave the home in a worse condition than when they took occupation.
“Or, assuming the home had a functional kitchen or bathroom on occupation, any upgrades or renovations begun in these areas may have to be finished, at the buyer's cost, so the property can be returned to the seller in the same working order as when they moved in,” Kotzé says.
Such situations are difficult to resolve and can lead to lengthy and financially damaging disputes, he says.
“It is better move in and enjoy your new home until the transfer of ownership has been registered and you are certain it is yours."