When making a real estate investment by acquiring the bare ownership of a property, it is important to know what it means, and what rights and obligations the figure of the bare owner and the usufructuary have.
The right of ownership, according to our Civil Code, is made up of the ownership of the property (having the property in your name, as the legitimate owner of the same) and the right to use and enjoy the property.
These two aspects, ownership and the right to use and enjoy the property, when held by the same person, it is said that the person has full ownership of the property.
However, these two aspects can be held by different persons.
One person can have the title to the property and another person can have the power 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 the Usufructuary.
This is set out in article 467 of the Civil Code, which states:
“The usufruct gives the right to enjoy the property of others with the obligation to conserve its form and substance, unless the title of its constitution or the law authorises otherwise.
The usufruct gives the right to enjoy the property of others with the obligation to preserve its form and substance, unless the title of its constitution or the law authorises otherwise”.
Powers of the Usufructuary
- Use and enjoyment of the property
- To make the fruits of the property their own, they will be the beneficiary of the yield of the property, for example, the rental income.
Art 471 of the Civil Code: “The usufructuary has the right to receive all the natural, industrial and civil fruits of the usufructuary property. With regard to the treasures found on the estate, he shall be considered as a stranger”.
He may transfer his right of usufruct over the property, he may rent it, sell his right and mortgage his right.
Duties of the Usufructuary
According to Article 491 et seq. of the Civil Code:
The usufructuary, before entering into the enjoyment of the property, shall:
1º- Draw up an inventory of the usufructuary’s assets, with the owner or his legitimate representative being summoned, valuing the furniture and describing the state of the real estate.
2º- To provide a bond
In order to guarantee compliance with the obligations established for the position of usufructuary, the latter must provide security.
If the usufructuary does not provide security in the cases in which he is required to do so, the bare owner may demand (Article 494 of the Civil Code)
- that the real estate be placed in administration,
- that the movable property be sold,
- that public bills of exchange, registered or bearer bonds be converted into registrations or be deposited in a bank or public institution
- that the capital or sums in cash and the price of the disposal of movable property be invested in safe securities.
Both the obligation to take an inventory and the obligation to provide security may be waived if no harm is caused to anyone (Article 493 of the Civil Code).
3º- Taking care of the property
The usufructuary shall take care of the things given in usufruct as a good father of a family (Article 497 of the Civil Code).
Likewise, the usufructuary shall be liable for any damage or loss suffered by the property due to the fault or negligence of the person to whom he has transferred its use and enjoyment (Article 498 of the Civil Code).
4º- Conservation and repairs
If a third party carries out any act against the right of ownership of the bare owner, the Usufructuary must inform the bare owner of this, and if he fails to do so, the bare owner will be held liable.
6º- Pay the fees and taxes levied on the use and enjoyment of the property, but not those levied on the ownership of the property. (Article 504 of the Civil Code)
7º- To pay the costs of the proceedings relating to the usufruct.
8º- When the usufruct is extinguished, possession of the property must be handed over to the bare owner.
Nuda propiedad (bare ownership)
This is the right of title (ownership) over an asset, which cannot be used and enjoyed because the right of usufruct over it is not held.
Rights of the bare owner
The bare owner may:
“The owner of property in which another has the usufruct may alienate it, but not alter its form or substance, nor do anything to it that is detrimental to the usufructuary” (Article 489 of the Civil Code).
- He may transfer his ownership in whole or in part
- Can mortgage the bare ownership
- He may carry out works on the property: “The owner may carry out works and improvements to the usufructed property, or new plantings on it if it is rustic, provided that such acts do not diminish the value of the usufruct, nor prejudice the right of the usufructuary” (Article 503 of the Civil Code).
Obligations of the bare owner
- The bare owner must carry out any necessary extraordinary works on the property: “Extraordinary repairs shall be at the owner’s expense. The usufructuary is obliged to give him notice when it is urgently necessary to do so” (Article 501 of the Civil Code).
- He must pay the taxes and charges levied on the ownership of the property (but not those levied on the use and enjoyment of the property).
- You must pay the community fees of the owners’ association.
If you need help with this type of operation, please contact us.