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Instalment Sale: A Solution To Owning Property With The High Cost Of Living?

Instalment Sale: A Solution To Owning Property With the High Cost Of Living?

Homeownership often feels out of reach; especially in these times where the cost of living is extremely high, and the interest rates keep increasing like there’s no tomorrow!

Don’t despair, there is another way for you to become a homeowner! Have you heard of instalment sale agreements?

What Is An Instalment Sale Agreement?

In terms of an instalment sale agreement, you pay the purchase price of a property in instalments, usually over a period of 5 years, interest-free. In addition, you pay an agreed ‘occupational rental’ to the seller until such time that the purchase price has been paid in full.

As security for the payment of the purchase price, the seller retains the title deeds of the property. While the purchaser is protected in that the Instalment Sale Contract is noted against the title deeds in the Deeds Office. This is a win-win for both the seller and the purchaser.  

This means the seller will not be able to sell to anyone else or increase their bond. 

Requirements For An Instalment Sale

The requirements for an Instalment Sale Agreement are quite simple. Let’s break it down.

An Instalment Sale Agreement must contain the following information:

  1. The agreement must be in writing and signed by the Seller and Purchaser (wet ink),
  2. The correct names of the Seller & Purchaser,
  3. The purchase price and that the said purchase price will be paid to the Seller over a period of time in instalments,
  4. The deposit payable (if applicable), usually the purchaser pays a deposit enough to cover the estate agent’s commission,
  5. The period of time over which the instalments are to be paid must be no less than one year,
  6. The instalment sale agreement must be registered against the title deed of the property, this means that the title deed will be endorsed by the Registrar of Deeds to confirm that there is an agreement between the Seller and the Purchaser securing the purchaser’s rights to the property and preventing the Seller from selling to anyone else.
  7. The purchaser will have to pay transfer duty to SARS (if the fair value of the property is more than R 1 100 000,00) as well as conveyancing costs to record the contract against the title deed of the property and for the transfer thereof into the name of the purchaser once the full purchase price has been paid. 

Seems pretty straightforward right? Well, it is!

If you’re interested in exploring this option further, our expert conveyancers at AMC Hunter Inc. are here to assist you every step of the way, from drawing up instalment sale agreements to registering them in the Deeds Office. Feel free to reach out with any questions and let’s make your dreams of homeownership a reality!

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