Moving in before transfer: The pros, cons, and legal considerations

When purchasing a property, you typically can only move in once the transfer is registered at the Deeds Office. However, early occupation—moving in before the registration—may be possible in certain cases.

There are several reasons why a buyer might want to move in early. For instance, the property may be vacant, and the seller may agree to early occupation. Alternatively, the seller might wish to vacate the property sooner, creating an opportunity for the buyer to move in—especially if the buyer doesn't need to sell another property first.

It’s important to note that early occupation is not a right. The seller is under no obligation to grant early access, and it’s often recommended that occupation only occurs after the transfer of ownership has been registered to minimize risks.

Considerations for early occupation

If both parties agree to early occupation, it’s crucial that specific terms and conditions are included in the sale agreement. These terms should address matters such as the transfer of risk, costs, and liabilities, and it is advisable for a Conveyancer to review these conditions.

During the period of early occupation, the buyer is generally required to pay occupational rent to the seller until the registration of transfer is complete. This rent amount is typically specified in the Offer to Purchase, ensuring both parties understand the financial expectations upfront.

In addition to occupational rent, the buyer is responsible for utility costs, such as water and electricity, and any other agreed-upon expenses during this time.

Limitations on early occupation

Buyers should be aware that during early occupation, they are legally tenants, not owners. As such, they cannot make changes to the property without the seller's consent.

If the property is vacant at the time of the buyer's Offer to Purchase, and the buyer is interested in early occupation, it’s advisable to negotiate this aspect upfront with the seller.

In cases where the transfer is registered before the agreed-upon occupation date, the seller must refund the buyer for any occupational rent already paid, unless a different arrangement has been agreed upon.

How is occupational rent calculated?

The amount is generally agreed upon in the agreement of sale and is usually equal to the amount the property can be rented out for (market-related value). In most cases, this will equal about 1% of the purchase price. The rates and taxes for the property remains the responsibility of the registered owner, unless the contract stipulates otherwise. Similarly, utility charges such as electricity, water and levies, can be negotiated by the parties in the contract.

What to do while you are waiting for the transfer of ownership

Draft a new budget

Your budget is likely to look very different in a new home. If you have not done so already, be sure to spend some time carefully considering all the new expenses that will need to be covered once you have moved in. Ask the seller roughly how much they spend on rates and utilities in a month. Get quotes for internet packages in the area. Factor in the monthly instalments if you have taken out a home loan. Find out if your insurance premiums will be affected by the move – if you are moving to a place with increased security, your car and household insurance might even be less.

Organize for the move

Two factors will always be true when it comes to planning for a move: (a) you have less available time than you think and (b) you have accumulated more than you realize. The sooner you can start packing out cupboards, the better. You’ll most likely find that you have a lot of items that you would like to donate or dump. Allowing yourself ample time to go through your belongings can make the whole process less stressful. Also, moving companies can get booked up quickly. Use the time before the transfer to request quotes and provisionally book for the moving date.

Start window shopping

In all likelihood, you will have a long list of items you would love to have in the new home. Take the time before the move to shop around for the best prices. If you have not yet decided on how to decorate each room, spend some time going through online portals like Pinterest or flip through home décor magazines for inspiration and ideas.

Enjoy the last moments in your old home

If you are in any way sentimental, take the time to say a proper goodbye to your old home. Host your last few dinner parties and savour the time you have left in your old home and neighbourhood. Take some photos of each room to remember the place by – even if it was not your favourite home, it can still be great to one day look back to remind yourself where you first started.