These schemes usually have extraordinary features, which other developments don't have, such as a frail care centre or full-time nursing care, restaurant facilities, great emphasis on security and so on.
There can also be certain stipulations, which make living in these schemes more attractive, like only allowing retired persons and spouses of retired persons to occupy the units so that they share common interests. In most cases these schemes are developed as sectional title schemes, and can also be share blocks, club memberships or where the relevant Minister often, by notice in the government gazette, declares a housing development scheme.
Retirement scheme units are sold on a so called 'life rights' basis, whereby a buyer is entitled to occupy the unit for as long as he lives. What happens when the buyer dies is normally regulated by the contract of sale between the buyer and the developer.
A financial institution will not finance a 'life right' property, by means of mortgage loan as a life right is not immovable property and therefore the bank cannot register a mortgage bond over the title deeds of the property.
Just because a development is called a retirement scheme, does not mean that it is one. The Housing Development Scheme for Retired Persons Act 65 of 1988 regulates a retirement development, although certain developments do not comply with the exact specifications of the act. This needs to be disclosed to the buyer, although he may still be covered by other acts such as the Sectional Title Act 95 of 1986 or the Share Block Act 59 of 1980.
A purchaser should however be cautious when buying a life-right in a retirement scheme, which is not regulated by the Housing Development Scheme for Retired Person Act, as the Act will not protect such purchasers.
This article originally appeared in Property Power 11th Edition Magazine. To order your copy at the discounted price of R120 click here
