The investment operation consisting of the purchase of the bare ownership of a property, with the usufruct of the property corresponding to the person who is currently living in the property.
It is important to be clear about what is meant by bare ownership and usufruct as explained in the first part of this article.
By way of example, the right of ownership, in our legal system, is made up of the ownership of the property (having the property in your name, as the legitimate owner of the property) and the right to use and enjoy the property.
The person who holds the title of ownership is called the Bare Proprietor.
The person who has the right to use and enjoy the property is called Usufructuary.
Advantages of the purchase of bare ownership
This operation offers the buyer the possibility of acquiring the property for a price much lower than the market price and the seller obtains the liquidity corresponding to the amount of the purchase price and the possibility of continuing to live in the property.
Disadvantages of the purchase of the bare property
The naked owner will not be able to dispose of the property until the usufruct is extinguished.
How is this transaction carried out?
This operation is constituted by means of a voluntary usufruct through an intervivos transfer.
Article 468 of the Civil Code: “Usufruct is constituted by law, by the will of the individuals manifested in acts between living persons or by last will, and by prescription”.
This must be done by means of
- Public deed of sale before a notary public
- Settlement of the corresponding taxes
- Registration in the corresponding land register
When does the bare owner acquire the right of use and enjoyment (usufruct) of the property?
The bare owner acquires the consolidation of both rights (ownership and use and enjoyment) when the usufruct is extinguished.
The usufruct will be extinguished:
1.-If it is a usufruct for life, when the usufructuary dies. If there is a plurality of usufructuaries, when the last of them dies.
“A usufruct constituted for the benefit of several persons alive at the time of its constitution shall not be extinguished until the death of the last surviving one” (Article 521 of the Civil Code.)
If the usufructuary is a legal person, the usufruct is extinguished by the extinction of the legal person or, at the latest, after thirty years.
“A usufruct may not be constituted in favour of a people or corporation or society for more than thirty years. If it has been constituted, and before this time the village is barren, or the corporation or society is dissolved, the usufruct will be extinguished by this fact” (Article 515 of the Civil Code).
2.- By the renunciation of the Usufructuary.
3.- If it is a temporary usufruct, by the expiry of the agreed time.
4.- Prescription for non-use, 30 years in the case of immovable property (Article 513 of the Civil Code).
5.- Due to the coincidence in the same person of the condition of bare owner and usufructuary.
Considerations for the purchase of bare property
In order for the operation to be profitable, it will be necessary to consider the specific case and take into account the savings obtained in the purchase price of the property, market trends and the estimated time of subsistence of the usufruct.
If you need help with this type of operation, please contact us.