Case study:
“A family member bought a townhouse in a retirement village 8 years ago and paid R1.3 million. The contract stipulated she has life long rights. She is now moving to be closer to her children. She may not rent out the property. Furthermore should she sell the property she will get NOTHING (strictly speaking surely the property has increased in value….). Should she die, her children will get NOTHING in terms of the property. Could someone advise if this is even legal considering the CPA that came into place……”
Mc Naught and Co says:
When you buy a property normally it’s easier to compare value for value. With life rights it’s infinitely more difficult and also similar to life insurance. If you die soon, life insurance is a bargain for the family, but if you last long, all the premiums paid can amount to more than the payout. It’s a gamble. With life right purchases, comparisons are difficult because some schemes pay back the original purchase price and your family loses the escalation in value of the property, other schemes retain all and the whole initial payment is lost. Anyone buying into these schemes needs to be properly informed and get expert advice before signing so you know what you’re getting yourself into and be able to draw up comparisons.
A copy of the draft contract (before signing) should be brought to us for advice.
Phone 0870210123 for an appointment in Durban or Johannesburg or email [email protected] with the draft contract.