select
|

The ins and outs of a usufruct

The definition of a usufruct is a legal right given by an owner to someone who is not the owner, to use the owner’s property for a certain period, usually for the remainder of that person’s life.  

The person who holds the usufruct, also known as the usufructuary, has the right to make use of the property and enjoy its profits and benefits provided the property is not damaged or altered in any way. At the end of the stipulated period, the usufructuary must hand the property back over to the rightful owner or heirs.

Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, says that a usufruct would come into play, where a husband passes away leaving his home to his children but stipulates that his wife has use of the property and contents in it for the rest of her life or until she remarries. While the property is transferred into the name of the children, the usufruct is registered against the new title deed in favour of the surviving spouse. He adds that a usufruct is often created because it reduces the amount of estate duty payable. However, it is important to be aware of the possible tax implications for the parties involved.

“During the prescribed period, the usufructuary has the right to enjoy the property and all the benefits that come with it, but they are not obliged to live in the house. They are within their rights to let the property out to someone else and gain a rental income from it, provided the rental term doesn’t exceed that of the usufruct. While the usufructuary can rent the property out, they are not allowed to sell or leave the home to another party,” Goslett explains.
 
Although the children are ultimately the heirs to the property, Goslett says that while the usufruct is in effect, they will have no right or authority with regard to how the property is used or enjoyed.  The children must refrain from interfering with the use of the property. However, they do have the right to protect their interests should they feel that the usufructuary is using the property inappropriately.

He adds that while the usufructuary’s rights to the use of the home are protected, there are certain obligations that need to be fulfilled. For example, the usufruct must be used for its intended purposes, and the usufructuary is legally bound to act as a diligent owner that may not misuse the property. The usufructuary is also responsible for paying the assessment rates and general day-to-day costs of maintaining the home. He or she is not obliged to do any large-scale repairs that result from normal wear and tear or daily use. While there is no obligation for the usufructuary to insure the home against storm, fire or other such damage, it is advisable.

“The heirs to the property are responsible for keeping it in a habitable state at all times, as well as paying for the repairs. Depending on the age of the children or their financial status, this could be a massive burden to carry,” says Goslett. “Ideally, provision should be made for the husband to leave enough money to their surviving spouse and children to ensure that the usufruct property is maintained and the monthly expenses such as rates and taxes are paid. A life policy could provide the financial means to ensure that this is done.”

If the heirs pass away before the infructuary, their portion of the usufruct assets is transferred to their heirs - however, the conditions remain subject to the existing usufruct which is in place.  

“A usufruct is a way to ensure a surviving spouse has a roof over their head and is looked after for the remainder of their life. That said, those who are looking at adding a usufruct to their will should consult with a professional tax consultant or financial adviser to fully understand its implications and how it can impact those involved,” Goslett concludes.      


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 23 Feb 2018
      RE/MAX Property Associates’ Table View Office, which services property buyers and sellers along the Table Bay coastline and surrounds, has recently sold a home in Woodbridge Island for R11 million – the highest price paid for any home in the sought-after security complex.
    • 23 Feb 2018
      Choosing to invest in an overseas property can be daunting. But as more and more investors recognise the value of a diversified portfolio that includes property outside of their own country of residence, international property investment is growing in popularity.
    • 23 Feb 2018
      The positive change in South Africa’s political landscape is paving the way for an upswing in the local property market.
    • 22 Feb 2018
      An excellent credit score is one of the most priceless assets a potential home buyer can have. This tool has the power to secure favorable mortgage and refinancing rate, influencing everything from the size of the loan repayment to the interest rate on the home loan.
    • 22 Feb 2018
      What do you do if you love your home’s location and the area, but the home no longer fits your growing family’s needs? Do you stay and renovate your existing home or find a home that meets your developing criteria?
    • 22 Feb 2018
      While every owner wants to sell their property at the best possible price, overpricing a home can be the kiss of death for a sale.
    • 21 Feb 2018
      Given the hand they were dealt, government has performed a delicate balancing act which it is hoped will serve to reignite confidence in investment in South Africa, regain our global credibility and satisfy the credit ratings agencies, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
    • 21 Feb 2018
      The real estate mantra, ‘location, location, location’ remains a strong market influence regardless of the prevailing economy, with suburbs like Rondebosch enjoying the buffering benefit of being ideally situated.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK