What is an ‘usufruct’?


Although the name sounds strange because it is a Latin term, the word ‘usufruct’ simply means ‘the use of the fruits’. Applied to property ownership, this simply refers to the right to use of the property for personal use or to receive the benefit of any rent from the property, as the case may be.

usufructIn practical terms, the rights to use the property can be separated from the title (bare dominium) of the property and this aspect holds a solution for property owners wanting to transfer property registered in their names to their children or any other third party for that matter, NOW, as opposed to leaving it in a will,  at a cost effective rate.

Some of you may have faced the problem that you are considered ” too old”  to qualify for a bond, and yet have a fully paid off property  already owned and registered in your personal names. You can now sell the ownership (bare dominium)of the property to your children or other family members, to raise much needed cash, and your children or other third party will not have to pay the full transfer duty all over again which can run into tens of thousands of Rands.

As the ownership of a property which is encumbered by a usufruct is not worth much, the value of such ownership is negligible and it is this amount that transfer duty would be payable on.

You get to stay in and use your property but it will be henceforth owned by your children or other third party and, on your passing, the usufruct you have, dies with you, and your children or other third party automatically  become full owners of the property.

And what’s more they may even be able to get a bond to pay you the bare dominium value, but some risk does arise for you in this scenario.

This mechanism is of specific application and may not be applicable in certain circumstances.

Contact us if you think it may be a solution for you!