Think before you ink - A vital lesson for the potential tenant and/or purchaser

Potential tenants and purchasers often do not have the necessary skill or knowledge to scrutinize purchase or rent agreements, or simply do not read the agreements in full. The best option is to acquire the services of a suitable and qualified legal practitioner, but here are a few tips regarding the importance of the purchase agreement and/or lease agreement.

LEASE AGREEMENT

Stamp duty

It is always important to include stamp duty and ensure that the calculation is correctly calculated.
Here is an example of how stamp duty is calculated, where an agreement is concluded between a tenant and landlord for an amount of N$ 5 000.00 per month and for a term of 12 months:

5 000.00 x 12 = 60 000
60 000 / 1 000 = 60
60 x 5 = N$ 300 stamp duty

Pet friendly

Always make sure that the lease agreement stipulates that the premise being leased, is pet friendly if you, as the tenant, have a pet.
Additionally, also make sure that the body corporate rules allow for this in addition to the lease agreement.

Breach of contract/agreement

Always ensure what the consequences would be if you as tenant want to cancel the agreement. Most landlords direct real estate practitioners not to insert a so-called “exit clause”. Therefore, if you as tenant sign to lease a certain premise for 24 months, you must fulfil your contractual obligation.

PURCHASE AGREEMENT

Price

Always ascertain whether the price includes commission and relevant costs.

Agent commission

In most cases agent commission is calculated at an average of 5%. However, it is always important to note that the seller is responsible for agent commission, as there is a mandate agreement between the seller and the real estate agent to canvass a purchaser for the property. However, most agreements may stipulate that agent commission be paid in addition to the purchase price.

Bond and transfer costs

Bond cost is the expense for registration of a bond. It is calculated on the loan amount.

Transfer cost relates to registering the property. This is calculated on the purchase amount.

Usually, both costs are excluded. There are many calculators which can assist in calculating bond and transfer costs, but rather request the help of a conveyancer.

Suspensive condition

This is a condition that suspends certain rights and obligations, until a certain future event occurs.

An example is where a purchaser has a certain time to obtain a certain loan amount. If either the amount or time is not met, the agreement is declared to be null and void. This clause protects both the purchaser and seller.