21 May 2024
Occupancy Certificates are legal documents certifying that a property complies with all relevant building regulations and by-laws, and is safe to occupy. They are typically received after an official inspection of completed renovations, ticking the final checkbox of the municipal approval process.
What many homeowners don’t realise, however, is that Occupancy Certificates are not just important as part of the building/renovation process. They also play a crucial role in many property sales – in spite of the fact that they are not a legal requirement for property transfers.
“In the same way sellers aren’t legally required to provide approved plans in order for a property to
be transferred, they’re also not required to produce an Occupancy Certificate,” says Roger Lotz, franchisee of the Rawson Properties Helderberg. “The trouble is, not having these documents in order can create some serious difficulties for buyers – particularly when it comes to securing a bond.”
Lotz explains that most South African banks require proof of a property’s legality before they will finance its purchase. If the seller does not – or cannot – provide this in the form of approved plans and an Occupancy Certificate, the buyer may find themselves struggling to get finance approval.
“The good news is that you can apply for an Occupancy Certificate at any time, so it’s never too late to get that process started,” says Lotz. “The bad news is that it can be an expensive exercise.”
2024 application fees for Occupancy Certificates in the City of Cape Town can be up to R2350. If approved plans are not available to accompany the application, as-built plans will also need to be created, adding several thousands of rand in draftsman’s fees.
“Because of the expense, the question of who should pay for an Occupancy Certificate when it is required can become a contentious issue,” says Lotz. “In an ideal world, the seller should have secured this as part of their building work or renovations. However, because the Occupancy Certificate is a bond requirement, not a transfer requirement, it is technically the buyer’s responsibility.”
Unsurprisingly, this can significantly sour buyers’ attitudes towards a purchase, and even cause a sale to fall through altogether. To prevent this from happening, Lotz strongly recommends sellers get ahead of the problem by discussing potential hurdles like approved plans and Occupancy Certificates with their agents at the mandate stage.
“A good real estate agent should discuss all of these details with sellers before their property is even listed,” he says. “They’ll be able to help you weigh up the pros and cons of getting an Occupancy Certificate in advance and, if necessary, recommend reliable service providers to make the process as easy as possible. They’ll also be able to ensure the purchase documentation is clear on what will and won’t be provided by the seller so that buyers can make informed decisions from the get-go.” Lotz reiterates that sellers are under no obligation to provide an Occupancy Certificate.
“That said, buyers appreciate a seller that has their act – and their documentation – together,” he notes. “In challenging market conditions, that can be a valuable competitive edge."
