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Contingent Usufructs

23 October 2014

Section 66 of the Deeds Registries Act 47 of 1937 limits the duration of a usufruct to the lifetime of the person in whose favour it was created, and further restricts the cession thereof to the owner of the land encumbered thereby.

Strictly, according to the above section, a contingent usufruct is not capable of being registered. However, practice does allow for the registration of such contingent right. Contingent being defined in the Concise Oxford Dictionary as: “that can be anticipated to arise if a particular event occurs”.

Before embarking on a discussion of the contingent usufruct and the registerability thereof, a clear distinction must be drawn between a contingent usufruct and a usufruct in favour of more than one person. It is trite law that a usufruct may be created in favour of more than one person. The wording of the instrument whereby the right was created will determine the extent of the usufruct on the death of any of the usufructuaries or a waiver by any of them.

Where a usufruct is, for example, ceded to two or more persons in equal undivided shares and one of the usufructuaries die, the servitude will only lapse in respect of the undivided share of the deceased, and the property will remain subject to the usufruct in respect of the other holders’ undivided share. However, where a usufruct is created in favour of two persons jointly, the principles of the ius accrescendi apply on the death of the first dying. In the same vein, where a usufruct is created in favour of spouses married in community of property, the usufruct does not lapse partially or in respect of an undivided half share where one of the spouses die, but again the share of the deceased accrues to the surviving spouse. The usufruct thus will only lapse in toto on the death of the surviving spouse.

It is also trite law that more than one usufruct cannot exist concurrently over the same property. Furthermore, in terms of the maxim nemo plus iuris ad alium transferre potest quam ipse haberet, nobody can transfer more rights than he owns. It is thus clear that where a usufruct is over property which is already subject to a usufruct, the second usufruct will not be capable of being registered. To circumvent this, practice has allowed for the registration of a contingent usufruct. Registrars of deeds will allow that the bare dominium be registered subject to the existing usufruct and the deed will further be made subject to the condition in respect of the second usufruct (this being the contingent usufruct). The second usufruct is not registered, and may only be claimed from the bare dominium owner once the first usufruct has lapsed. In terms of Registrars Conference Resolution 47 of 1987, a registrar of deeds will insist on the cession of the contingent usufruct as soon as he becomes aware of the lapse of the first usufruct.

A further example of a contingent usufruct is where the owner of land bequeaths a usufruct to his son, A, who is married out of community of property to B, subject thereto that should B survive A, she will be entitled to the usufruct after the death of A. As already discussed two usufructs cannot exist concurrently over the same property. To overcome this problem, the registration of a contingent usufruct in favour of B is the only solution. The creating document of the usufruct must be made subject to a further condition that B may claim her usufruct only after the lapse of the existing usufruct in favour of A.

Where the contingent usufruct is one which contravenes the provisions of, for instance, the Subdivision of Agricultural Land Act 70 of 1970, the consent from the Minister will have to be lodged when the usufruct is ceded to the contingent usufructuary. Similarly, where transfer duty is payable on the creation of the usufruct, in terms of section 2 of the Transfer Duty Act 40 of 1949, the transfer duty receipt or exemption certificate must also be lodged.

Whether a contingent usufruct can be regarded as a registered real right is a question open for debate, but will not be entertained now. However, from a deeds registry point of view, a contingent usufruct is regarded as a real right. For this reason the practice allows for the application of the provisions of section 69, 69bis and regulation 41(7) of the Deeds Registries Act 47 of 1937 to property subject thereto.

If property is subject to a contingent usufruct, such property cannot be transferred or mortgaged free from the contingent usufruct. The holder of the contingent usufruct can, by an underhand consent, waive his right in which case the provisions of section 68(1) of the Act will be invoked to record the lapsing of the usufruct against the title of the land.

Where the bare dominium owner and the holders of the usufruct and contingent usufruct together sell their respective rights in the property, the provisions of section 69(1) of the Act can be applied, in terms of which the bare dominium owner and both the usufructuary and contingent usufructuary jointly act as transferors to transfer the property to the new owner, free from any usufruct.

Should only the initial usufructuary sell or waive his right the contingent usufruct will have to be created notarially and the new transfer be made subject thereto.

In the event of the bare dominium owner wishing to register a mortgage bond over the property, it is debatable whether any bondholder will accept property subject to a usufruct and a contingent usufruct, as security. To afford the bondholder the maximum security, the holders of the usufruct and contingent usufruct may together with the bare dominium owner, mortgage their respective rights. Alternatively the holders of the usufruct and contingent usufruct can waive their rights in favour of the bond. This can be done either notarially or in the bond in terms of regulation 41(7) of the Deeds Registries Act.

I hope that the above has shed more light on the problems surrounding contingent usufructs and a uniform practice in this regard will now prevail.

Allen West
Property Law Specialist
MacRobert Incorporated

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