The Life Rights concept was introduced to SA way back in the 1970s, but many local consumers are still not sure how it works – and how exactly it differs from a sectional title, full title or share block purchase.
Gerhard Kotzé, MD of the RealNet estate agency group, a person who buys a life right in a retirement village is quite simply purchasing the right to occupy a particular home in that village for the rest of his/her life. “And when couples buy, that right extends to the last surviving spouse and cannot be otherwise terminated by anyone except the buyer.
“What is more, the rights of those who buy into life rights schemes in SA are specifically protected by the Housing Development Schemes for Retired Persons Act (HDSRPA), which states that life right holders enjoy the same rights as if they had entered into a registered long-term property lease.
“This means that the real right of the life right-holder (to continue living in a particular home) will rank in priority over any other right, no matter whether or not this other right is registered over the property, and no matter when this right was registered.” Read more here about buying a property with Life Rights.
Property24 reader Kobus Muller contacted us to enquire about the parameters of selling a life right unit in a retirement scheme and whether it needs to be done by a registered real estate agent or not.
“We developed a small retirement village some years ago on our church grounds, 80% life right to the resident and 20% retained by the church.
“We have marketed and sold the life right on units over the years through basic advertisement methods and the administration of the sales was done by either an appointed individual in the church or an appointed resident.
“This individual was paid an administration fee,” says Muller.
But “does the selling of a life right “unit” in a retirement scheme require to be done by a registered real estate agent or not?” asks Muller.
Mike Spencer of Platinum Global confirmed, “Life rights, means that the church retains ownership of the property but gives the buyer of the right the right to stay in the property until they pass on - or to let the unit to somebody else until they need it for themselves.”
“Nobody can act as an estate agent by selling a property (or letting one) on behalf of another for a commission or fee unless they are registered as an estate agent with the EAAB or are an attorney.”
Since this property being sold is owned by the church and they would be selling a right in their own property, there is a difference in process according to Spencer.
“As long as they use an employee of the church to do the work (or a member of their board) there should be no problem.”
But no fees should be paid, says Spencer.
“Very few estate agents have any experience with life rights and would not be qualified to deal with this type of property transaction. Such a transaction would require an agreement that was drawn up by the owner of the property. Every time the right expired, the ability to sell a new right would revert to the owner”, which in this instance is the church Muller works for.
“A life right cannot be sold as it is a right for life of the person to bought it in the first place and cannot be transferred to somebody else. It can only expire on death of the holder or be given up.
“An example of this would be if the holder decides to move overseas and formally says that they no longer want the right.”
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