What is a usufruct?

Q 1: How does a person set up a usufruct?

• Will or testament: Usufruct may be created through a will, in which the property owner specifies a usufructuary who may enjoy the benefits of the property without gaining ownership.
• Donation: An owner can choose to grant usufruct rights to another person as a donation, while still maintaining ownership of the property.
• Contract: Usufruct may be established through an agreement between the parties involved.

Q 2: What should the owner consider before granting usufruct rights?

The most critical decision is the choice of usufructuary. The usufructuary is responsible for the maintenance and care of the property throughout the duration of the usufruct. If the usufructuary lacks the financial means or capacity to meet these responsibilities, damage to the property could occur or disputes might arise over its upkeep.

Family dynamics play a significant role in the decision-making process. Heirs may have strong views on how the property should be managed and used. Clear communication between parties will prevent conflict or misunderstanding.

Conditional terms may be attached to the usufruct. While usufructs inherently carry certain rights and obligations, it is advisable to formalise the terms in writing to minimise the potential for dispute. The agreement should clearly outline the respective responsibilities for maintenance, property taxes, insurance and any other relevant obligations, ensuring that both the property owner and usufructuary understand their duties. Furthermore, the written agreement should specify how the property should be cared for during the usufructuary’s lifetime.

Q 3: What if the usufructuary cannot afford to maintain the property?

If a usufruct has been created by contract and maintenance is a sole condition for the usufruct, the agreement can be terminated if the usufructuary does not maintain the property.

With an unconditional usufruct created in terms of a will, the bare dominium can potentially take legal action to compel the usufructuary to fulfil their maintenance obligations. In reality, it is difficult to do so. The best approach is often mediation (potentially appointing a third party to manage the property and cover necessary repairs, with costs deducted from the usufructuary’s benefits).

Q 4: Can a usufruct be challenged in court?

A usufruct can be challenged in court, depending on the context of the usufruct. For example, if the usufruct was created in terms of a will and the beneficiaries dispute the validity of the will or claim the terms of the usufruct contradict the broader intentions of the testator, there may be grounds for a legal challenge.

However, each case is dependent on the facts and mitigating circumstances. A legal professional can advise on the merits of a court action. Litigation should be avoided if possible.

Q 5: Can an usufructuary use the property as collateral for a loan?

A usufruct is a personal servitude, meaning the usufructuary does not own the property but has the right to use and enjoy it during their lifetime. As a result, the usufructuary cannot use the property as collateral for a loan, as they do not own the property.

However, the usufructuary may mortgage or pledge their usufructuary interest to the extent of their usufruct rights. In certain instances, if a judgment is obtained against the usufructuary, the usufruct may be sold in execution of the judgment. Should the usufructuary become insolvent, their interest in the usufruct passes to the trustee of their estate, who must sell the usufruct. The purchaser of the usufruct then gains the right to possess and enjoy the property for the remainder of the usufruct’s term. The purchaser does not purchase the property itself.

If the bare dominium wishes to register a mortgage bond over the property, it is uncertain whether a bond provider would accept a property subject to a usufruct as collateral. The holders of the usufruct may, in conjunction with the bare dominium, mortgage their respective rights in the property. Alternatively, the usufructuary can waive their rights in favour of the bond. This waiver can be executed by notary or included in the mortgage bond in accordance with Regulation 41(7) of the Deeds Registries Act.

Q 6: Does the usufruct allow for renovations?

Under a usufruct, the usufructuary is obliged to maintain the property and bear the costs of all necessary repairs to keep the property in good order and condition, with the exception of fair wear and tear. If renovations are likely to affect the long-term value or nature of the property, the usufructuary should make this decision in collaboration with the bare dominium, or in consultation with the heirs, if appropriate.

The usufructuary may be permitted to make improvements to the property, but they are not entitled to compensation for these improvements. Furthermore, while the usufructuary may remove such improvements, they are required to restore the property to its original condition by making good any damage caused during the removal process.

Q 7: Can the usufructuary bring a partner into the home?

The usufructuary has the right to live in the property and may invite others, including intimate partners, to reside with them. However, this right may be limited by the terms of the usufruct or by the wishes of the heirs. If the addition of an intimate partner negatively impacts the property's maintenance or if it contradicts the original intentions of the testator, the heirs may challenge the arrangement.

Q 8: Do heirs have any control over decision-making concerning the property?

Heirs do not have control over the day-to-day decisions regarding the property while the usufructuary is alive. However, they retain ownership of the property and can exert control over long-term decisions, ensuring that major changes or sales align with the testator’s wishes. If the usufructuary’s actions jeopardise the property’s value, the heirs can take legal action to address their concerns.