When Do Risk and Benefit Transfer in a Property Sale?

Buying or selling a home involves more than just agreeing on a price. One of the most important (but often overlooked) elements of a property transaction is understanding when risk and benefit pass from the seller to the purchaser.

This matters because it determines who is responsible for the property at different stages, especially if something goes wrong before transfer is complete.

Understanding Risk vs Benefit

In property transactions:

• Risk refers to who is responsible for damage, loss, or liability related to the property.
• Benefit refers to who is entitled to income (like rent) or use of the property.

While these typically go hand in hand, they can pass at different times — depending on what the sale agreement says.

The Legal Position: What South African Law Says

Under South African common law, risk passes to the purchaser as soon as the sale agreement is concluded, provided all suspensive conditions (like bond approval) have been fulfilled.

That means if a fire, storm, or other damage happens after signing, but before transfer, the buyer is usually liable, even if they haven’t moved in yet.

📌 Example:

You’ve signed the sale agreement, but the transfer will only happen in 2 months. If the geyser bursts next week, you, the buyer, may be responsible for fixing it.

What Most Sale Agreements Say in Practice

Most modern sale agreements change the default legal position and state that risk only passes on transfer, when the property is registered in the buyer’s name.

This protects buyers from liability before they take ownership and is particularly important in cases such as:

• Early occupation by the buyer before transfer
• Renovations before transfer
• Unexpected events, like the death of either party before transfer

Sample Clauses You Might See

🔹 Risk Clause Example:

“All risk in and to the property shall pass to the purchaser upon registration of transfer.”

This ensures the seller is responsible for the property until it legally changes hands.

🔹 Benefit Clause Example:

“All benefits of the property, including rental income and other earnings, shall pass to the purchaser upon registration of transfer.”

So even if the buyer takes early occupation, they only start earning rental income once the property is legally theirs.

Why It Matters for Buyers and Sellers

For Buyers:

• If your agreement follows common law, you may be liable for the property before transfer.
• You might need to arrange property insurance from the moment risk passes.
• Be cautious if you plan to renovate or occupy early, your risk may begin earlier than expected.

For Sellers:

• If risk passes on signature, you may no longer be liable for damage, even if you still live in the home.
• If risk passes only on transfer, you must ensure the property remains in good condition and is insured until handover.

Checklist: What Your Sale Agreement Should Cover

Make sure your agreement clearly sets out:
✅ When risk passes — on signature or on transfer
✅ Who must insure the property before transfer
✅ Who is responsible for damage if something happens before transfer
✅ When rental income or other benefits pass to the purchaser

Avoid Disputes — Get the Right Advice

Risk and benefit can have serious financial and legal consequences if not clearly agreed on. The safest option is to ensure your sale agreement reflects your intentions and protects both parties.

At Snymans Inc, our experienced conveyancers can help draft or review your agreement to make sure the transfer of risk and benefit is clearly defined and fair to both sides.

📞 Need help with your sale agreement?

Get in touch with us today, we’re here to guide you every step of the way through your property transaction.

Written by: Maret Carroll
Moderated and approved by: Rohula Kgabu

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