It has become quite common in South Africa for ageing couples to scale down to a granny flat on their own property and transfer ownership of the entire property to one or more of their children.
At face value, this appears to benefit all parties. With the financial assistance of their parents, the children now own a property which they could not previously afford. They also have their own children’s fond grandparents on hand with all the associated benefits.
For their part, the ageing parents still have a roof over their heads and a close support network. In addition, they don’t have to bother with the upkeep of the property, and they can see their grandchildren as often as they choose.
Problems
Gunston Strandvik Mlambo Attorneys warn that this situation has regrettably been known to give rise to serious difficulties time and again.
“One or other children moving into the main home - or their spouse - may find that they actually do not like having the older couple on the property. Ongoing conflict can result in them asking their parents to leave. If this is refused, they may take steps to have them evicted or moved to a retirement village or old age home.
“Alternatively, they could sell the property and buy a different home with the proceeds and place the parents in a retirement village or old age home.
“As the new owners of the property, they do, of course, have every right to do this,” say the attorneys.
Protection
It is essential that parents protect themselves against this sort of action when transferring property to their heirs.
This can be done by including a usufruct or habitatio clause as part of the agreement before the property is transferred.
A usufruct grants a person the right to the use, enjoyment and fruits of the property, whereas a habitatio gives the person the right merely to the use of the property. These rights are limited real rights and are usually granted for the lifetime of the person concerned or for a specified period of time.
The main consequence of these rights is that the person entitled to them cannot be removed from the property, or the property cannot be sold without their consent. This is an excellent protection for the parents, who are giving over their major asset to one or more of their children.
“Inserting such clauses in property agreements may seem to indicate a lack of trust and goodwill. However, this has to be accepted because our experience in property matters has shown that the adult children can - and often do - struggle with the idea of having parents sharing their property,” say the attorneys.
“Relationships that have been harmonious and friendly over the years can be ruined by living in close proximity. Very often, it is not the children but their spouses who find the arrangement irksome.
“Whatever the cause, however, it should be accepted at the outset that these relationships can possibly go sour, and parents have to protect themselves in the ways outlined above.”
If you are considering transferring property to your heirs, it is advisable to seek legal and tax advice concerning the structure of the transaction before committing to a course of action.
Writer : Sarah-Jane Meyer
