Usufruct, says Rob Lawrence, national manager of the bond origination service, Rawson Finance, is most commonly used when a married person (in most cases the husband) leaves a home to his children on condition that his spouse is allowed to live there for the remainder of her life.

To be legally binding a usufruct must be registered against the title deeds.

This can be a wise provision, says Lawrence, because it eliminates the need to transfer the property twice – first to the spouse, and then, when she dies, to the children – and it secures the latter’s inheritance because the widow cannot sell the property.

But, Lawrence points out, a usufruct arrangement can lead to problems if the user has insufficient funds – or is unwilling – to maintain the property properly.

“Regrettably,” said Lawrence, “there have been cases in which the surviving spouse, who may often be a second wife, has very little income of her own and cannot afford the maintenance costs of the property, the rates, levies and other costs.  Sometimes also she finds herself in an unsatisfactory relationship with the children/heirs.  This does happen quite often – especially if the heirs are her stepchildren.

“In that situation, there may be little or no motivation to maintain the home – and the children may avoid stepping in to help in this matter, even though it would pay them to maintain their property.  This all-too-common backing off can in a space of five to ten years result in the entire house losing much of its value.”

The children/heirs may decide to sell the house – but as the usufruct is registered against the title deeds, they cannot do so unless the buyer is prepared to honour the usufruct, which happens only very rarely.

Lawrence says that anyone going the usufruct route, should leave enough money, possibly in a separate account, to ensure that the property is maintained.  The donor might also consider authorising an independent person to initiate and supervise maintenance.

The heirs can, however, consider buying the occupant out – i.e. paying her an agreed sum to relinquish her usufruct. 

In a few cases, added Lawrence, the usufruct beneficiary will voluntarily give up the right to occupy – but this is seldom as satisfactory as being paid to relinquish it.

“It must always be remembered that a usufruct is registered at the Deeds Office against the title deed, so no transactions can take place on that property without due consideration given to this usufruct.”