A reader who owns a unit in a retirement village has questioned the Property Poser panel about the legalities surrounding the sale of life rights, specifically with regard to usus and habitatio.
He is currently renting the unit out but an elderly couple has approached him with an offer to purchase the right of occupation.
The reader says the husband and wife are both in their eighties already. They are offering to pay an amount equal to about 60% of the market value, in return for the right to live there until the death of the surviving spouse.
For them it is favourable because they are paying less than they would if they had purchased the unit outright. It is also advantageous for the reader because he will receive an amount equivalent to about 10 years’ worth of rental upfront.
The reader would like to know if this transaction is legally viable and whether it would be affected by the provisions of the Consumer Protection Act.
Willem Luttig from Raubenheimers Inc in George says the relevant legal structures in this case, namely usus and habitatio, are both ways in which a personal right can be established for a beneficiary.
“He or she acquires certain rights over a thing without becoming its owner.”
Luttig says the personal right of use, or usus, is a lesser right than, for example, a usufruct.
“It entitles a person to use another’s property, but not to appropriate the fruits of the property. He or she never becomes the owner of the property concerned.”
This right of use is given a value and a distinction is then made between this value and the value of the property, says Luttig.
“Similarly, the personal right of habitatio also entitles the holder to live in a building without ever becoming its owner.”
Luttig says the parties can register the personal right against the title deed of the property by executing a notarial deed.
“A notary can assist them in the drafting and registration. Transfer duty may also be payable to SARS, depending on the value of the personal right.”
According to Pieter van Rensburg, principal of Chas Everitt in George, it is important to note that the holder of a right to habitatio may sublet.
“An agreement should be drafted, setting out the parties’ rights and obligations to avoid confusion at a later stage. The right of habitatio should be clearly expressed so as to expire at the agreed time.”
Van Rensburg says the provisions of the Consumer Protection Act will not be relevant, as the reader would enter into this in his personal capacity as opposed to a business transaction.
“This wouldn’t be the case if he were a developer or a professional landlord.”
Van Rensburg says the provisions of the act would apply if he were to alienate these rights of use or habitation in the course of his business.
“Similarly, the transaction doesn’t appear to be unlawful in any way and is fairly balanced, with both parties carrying certain rights and obligations.”
As a final step, Van Rensburg says the reader should consult any rules regarding his ownership of the unit in order to establish whether this transaction is prohibited. “The homeowners’ association or body corporate would be able to assist here.”
As rental is seemingly permitted, Van Rensburg says it is unlikely that the envisaged arrangement would be prevented.
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