How will COVID-19 impact the buying and/or selling of property?

June 1st, 2020

Following the announcement by President Cyril Ramaphosa on 23 March of a 21-day nationwide lockdown and then the announcement of the extension of that lockdown due to the COVID-19 pandemic, many people who are contemplating on buying or selling their property are likely to put their plans on hold.

If you are a property buyer, the impact that the pandemic has on you will depend on what stage of the buying process you are in. If you are at the beginning stages and contracts have not been signed by the parties involved, it is recommended that you hold off on the process until there is certainty regarding the crisis. Those who find themselves in the middle of the transfer process will be tempted to do everything they can to speed up the process and make sure that the transfer and registration of the property is registered.

Similarly, estate agents and conveyancers will have to react strategically to this pandemic, both in the short-term and the longer term. At the time of writing this article, the Deeds Offices were closed due to the COVID-19 crisis and property transfers will be delayed until the Deeds Offices re-open. The COVID-19 crisis also has an impact on the occupancy date of the buyer due to the strict rules of lockdown. So, if the buyer’s occupancy to the new property falls during the lockdown period, the buyer will most likely be required to put their occupancy on hold, until an undetermined future date. This may have several implications on the buyer, such as making alternative plans for living arrangements, termination of leases being re-negotiated should they have been terminated in anticipation of the buyer occupying their new property.

In order for a party in a property transaction to protect themselves during this period, I recommend the following:

  • In terms of the delayed occupancy to the property affecting the buyer, the buyer could, for example, charge the seller 1% of purchase price per month also known as occupational rent. The buyer and the seller can also agree to other occupational rent terms, which could be less or greater than the 1% or they may also agree to no fee at all.
  • If you have already exchanged contracts and the property is currently occupied, then both parties (the buyer and the seller) can amicably agree on alternative dates to proceed with the move.
  • Should the buyer be at the end of their lease agreement, then the buyer should renegotiate their lease agreement with their landlord.
  • Where there is a delay in the transfer, the buyer should contact their conveyancer/estate agent for advice on actions to be taken, in order to safeguard the buyer’s interests.
  • Estate agents can draft ‘offer to purchase’ agreements with a suspensive condition that stipulates that the purchase will only go ahead once the property has passed a physical home inspection, which can be conducted once the lockdown has been lifted.
  • Sellers are free to continue to accept offers on your property, however, the process of selling the property may take longer than usual.
  • Estate agents, as well as conveyancers can carry out video consultations with their clients through video conferencing applications, such as Zoom, Whats­App, Skype and FaceTime, to name a few.
  • Conveyancers should continue to support the sales process as far as possible and should make sure their clients are aware of the difficulties of completing transactions in this period.

Junior Sidzumo LLB (UWC) is a legal practitioner at Landen Attorneys in Johannesburg.

This article was first published in De Rebus in 2020 (June) DR 6.

De Rebus