Leasing residential property on a long-term basis is an option for individuals who are looking for other ways to occupy property without owning it.
This type of ownership structure aims to give the occupier of the property similar rights to that of an owner of a full or sectional title.
Many new developments are offering a long-term lease as a form of title ownership.
A long-term property lease agreement ultimately offers the lessee limited rights to the land, including the right to occupy the property according to the agreement and for the prescribed period of up to 99 years and no less than 10 years.
This lease period is allowed to be extended as many times as necessary, with each extension offering a brand-new start to the 99-year time frame.
Additionally, this type of contract provides the lessee the same security of full title ownership.
When the lease agreement is first registered, the lessee pays the lessor a once off lump sum which covers their right to occupy the property as per the agreement.
The lease term starts on the date of registration which takes place in the office of the Registrar of Deeds. The lessee also has the option to renew or extend the lease term when it comes to an end.
Such a lease is registered as a notarial deed against the title of ownership by the lessor and in favour of the lessee.
This affords the lessee legal entitlement to carry out his or her right to use and enjoy the property in any way that remains within the rules and regulations of the homeowner’s association.
Any permanent improvements, additions or renovations form part of the land and therefore, it also forms part of the lease agreement.
The property can be sold at the price determined by the market value at the time of sale, or what a purchaser is prepared to pay for it.
Whether the sale is done privately or through an agent, the seller and the purchaser must agree on a price.
Once the property is sold, the lease term is extended to 99 years once again as the seller gives up his or her rights to the buyer.
Both the cession of lease rights and the extension of the lease period are registered in the Deeds Office at the same time. At this stage, the extension fee is also paid.
The seller is legally required to settle all outstanding debts, rates, levies, taxes and municipal bills which are related to the property for sale.
One of the major benefits of such a transaction is that transfer duties do not apply, which allows for a more reasonable purchase price to be negotiated between the seller and purchaser.
Additionally, the turn-around time of this transaction is typically much quicker than in the case of full title ownership transactions.
Leasing residential property in new developments on a long-term basis can afford you the same rights as full title ownership.
Our conveyancing attorneys are available to provide you with more information on the benefits of long-term lease agreements.
To find out more, or for legal assistance with understanding your private property lease agreement, please contact us.
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