O6. Housing Development Schemes for Retired Persons Act, 65 Of 1988

The Aim of The Act:

“To regulate the alienation of certain interests in housing development schemes for retired persons.”

Formalities in respect of contracts:

  • All provisions relating to the alienation of a housing interest to a retired person must be contained in a contract and such contract must be signed by the parties or their agents so authorized in writing.
  • The provisions above relating to signature by an agent acting on written authority may not detract from any other law relating to the conclusion of a contract in writing by a person professing to act as an agent or a trustee for a company not yet formed.


The purchaser is entitled to elect which official language the contract should be drawn up in.

Contents of the contract:

Section 4 of the act provides for the provisions of a contract where the seller is a developer. The same is attached hereto.

Right of occupation:

The rights conferred on the holder of a right of occupation are very much the same as those conferred on a lessee in a long-term lease and which lease is registered against the deed. This registered lease ranks as number 1 against any other right.

Alienation of land subject to the right of occupation:

The land may not be alienated without the right of occupation attached thereto unless 75% of the holders of rights consent thereto. Should they consent, the right holders have preferent claims in respect of the proceeds and such claim shall:

  • Rank in priority over the claim of any mortgagee;
  • May be equal to the amount paid in terms of the definition of the right of occupation –

‘Right of occupation’ means the right of a purchaser of a housing interest-

  • which is subject to the payment of a fixed or determinable sum of money by way of a loan or otherwise, payable in one amount or in instalments, in addition to or in lieu of a levy, and whether or not such a sum of money is in whole or in part refundable to the purchaser or any other person or to the estate of the purchaser or of such other person: and 
  • which confers the power to occupy a portion in a housing development scheme for the duration of the lifetime of the purchaser or, subject to section 7, any other person mentioned in the contract in terms of which the housing interest is acquired, but without conferring the power to claim transfer of the ownership of the portion to which the housing interest relates.


  • A right of occupation is registered against the title deed in the deed’s office by way of an endorsement.
  • It is essentially a life right in which the purchaser is entitled to occupy the property for as long as he lives.
  • The resale of the property after death is usually regulated in the agreement of sale. What people often find appealing about these schemes are the extra facilities such as frail care, nursing, restaurants, and the security available.
  • They most likely restrict occupants and allow only, for example, people over 50 and their spouses.
  • The right to occupy the property should be for the retired person and their spouse, no one else!
  • A financial institution will not finance a life right.

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