Written for Property Poser

A reader who is married out of community of property, excluding the accrual system, has approached the Property Poser experts regarding her rights on a jointly owned sectional title unit.

She explains that she and her husband both have children from previous marriages. In terms of their wills, the surviving spouse will receive usufruct on the deceased’s half-share of the property, while the deceased’s children will receive bare dominium (ownership) of the property.

The reader wishes to confirm that, should she be the surviving spouse, she would be able to remain in the property and that she would be liable to pay all levies, rates and taxes. She also asks whether it is correct that she and the bare dominium holders will be liable for repairs in even shares.

In the event of her spouse’s death, the reader says that, if she were in a position to do so, she would like to purchase the children’s entitlement to the property. She would like to know what the cost and capital gains tax implication of such a transaction would be.

The usufruct holder is entitled to the use and enjoyment of a property, says Susan Chapman from Rawson Properties Port Elizabeth Platinum. This includes the right to either live in the property or to let it out and receive the income.

“In this instance, our reader owns half of the property in her own right and in the event of her spouse’s death, she will retain this ownership and also acquire the usufruct on his half-share of the property.”

Chapman says this means that she would be liable for half of the rates and other expenses related to the property by virtue of her ownership of this half portion.

“The bare dominium holders will be liable for the other half, as well as half of other expenses that may be incurred from time to time.”

Should she be in a position to acquire the bare dominium left to the children, a bit of a calculation would be required, says Chapman.

“She is already the beneficiary of the right to the use and enjoyment of the property. She is therefore not paying for the full half-share, but only the value of the bare dominium, bequeathed to the children.”

According to Stiaan Jonker of Smith Tabata Attorneys in PE, the capital gains tax implication, if any, would fall on the children.

“They may be liable, should there have been an increase in the value of their share since the passing of their father. The purchaser will not be liable for this.”

Jonker says the reader has also enquired about how the cost of improvements to the property would be divided.

“It seems that she would like to make certain improvements in future and is of the opinion that the children should pay for half.”

The issue in such cases is that the parties are still co-owners of the property, says Jonker.

“Therefore, the children have equal rights regarding the improvements to the property.”

Accordingly, improvements should be made by agreement and, says Jonker, with a specific arrangement as to liability for payment.

“The cost of improvements effected without the consent of the children may not be recoverable.”

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