DIFFERENT TYPES OF OWNERSHIP
When buying into a retirement property, it is essential that you understand the types of ownerships of retirement properties that are on offer, and that best suit your needs. There are three ownership options available to you when buying retirement property - sectional title, share block and life-rights. Sectional Title Registration of a sectional title property is very similar to other sectional title purchases. Registration of the property is concluded through the Deeds Office and needs to be done by a conveyancer. There are the usual sectional title costs and fees involved which is transfer duty and conveyancing attorney fees. As the owner of a sectional title unit, you will automatically become a member of the body corporate - this will afford you the opportunity to be involved, and have a say, as to how the scheme is run. Share Block Scheme A company owns the retirement building and allocates a number of shares to that building - these are divided into blocks of shares. If you become the owner of shares in this company, you then have the right of occupation to certain portions of the building. Therefore, share block residents own shares in a company and not a section of the building. It can happen that a share block scheme is converted to sectional title. In this case, 30% of the owners in the scheme have to vote to convert. After the conversion takes place, at least half of the owners must support the resolution. Once this has happened, you will take transfer of your unit and will become a property owner, instead of a share owner. Life-rights With life-rights, you do not own the property. Buyers have the right to live in a property - this in terms of the Housing Development Scheme for Retired Persons Act. If the investors in a life-right scheme are married, the life right agreement extends to their spouse. When either one of them dies, the surviving spouse has the right to continue to occupy the property. When buying into a Life-rights Agreement, there are no legal costs, transfer duties or other taxes payable in this option. You need to establish the total value of the refund when your Life-right comes to an end. You also need to enquire if there is a sliding scale for the refund amount of a Life-right, based on how long you have lived in the unit. Find our how and when the refund will be paid, and who is responsible for the resale of the Liferight? (Life-rights is sometimes described as rental paid in advance) It is imperative that you research each of the options and implications of the sale prior to committing yourself. The retirement village itself or the estate agent is in a position to provide all relevant information about what sale options are available