A reader and his wife are enquiring about limited rights to selling and letting a property that they are interested in buying.
They are considering buying a small unit in a sectional title scheme which they want to rent out until circumstances cause one of them to move in.
They are planning for the eventuality where one of them passes away and the surviving spouse is forced to live on limited resources.
To this end, they are thinking of purchasing a studio unit to rent out until it becomes necessary to take occupancy.
See the reader’s question here.
In enquiring about a unit they are interested in they have been advised that their rights in respect of selling or letting the unit are limited.
For example, they would require the consent of the trustees should they wish to sell or let the property.
Although not specifically advised by the reader, it appears that the complex in question could be either a regular sectional titles scheme under the Sectional Titles Act or one administered in accordance with the Housing Development Schemes for Retired Persons Act.
Although you would expect the right of alienation of a unit in a sectional title scheme to be at the owner’s discretion, there is the possibility that it may require the consent of the trustees.
If so, the owner is required to notify the body corporate of any change in ownership before transferring a unit.
This is in accordance with Section 13 (f) of the Sectional Titles Schemes Management Act and also applies to the owner of a unit renting it to a tenant.
To legitimise the rights of an owner if there are restrictions on selling, the rules of the scheme would have to be amended.
If, however, the property in question falls within the ambit of the Housing Development Schemes for Retired Persons Act, the position is made clear in the provisions of the act.
Section 7(1) states that if a housing interest has been transferred to or has been vested in a person by virtue of a contract, no person other than a retired person or their spouse may occupy the land.
This could change if the written consent of all the holders of housing interests in the scheme is given.
Contravention of the provisions could result in a fine and/or imprisonment.
In simple terms, the purchaser of a unit in a retired persons scheme is purchasing a so-called life right which is, in accordance with the legislation, an entitlement equivalent to that of a lessee in a lease agreement.
It is quite possible that a retirement village is termed as such without the scheme actually falling within the ambit of and/or necessarily complying with the legislation.
Such a scheme may, however, fall within the ambit of the legislation applicable to sectional titles.
It is accordingly important for the reader to establish the exact nature and type of the unit he is intending to purchase.
He also needs to understand the legislation and rules applicable upon the acquisition, ownership and the extent of the permitted use and enjoyment of such a unit.
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