Limited rights in rem, part 2. What is usufruct, and can I sell a property burdened with it?
In the first part of the series on limited rights in rem we wrote about easements. Today it is the turn of usufruct — a right encountered less often than an easement, but capable of restricting a property even more severely. We explain how it differs from an easement, how it arises, when it is visible in the land and mortgage register, and how it affects whether a property can be sold and at what price.
What usufruct is
Under Article 252 of the Civil Code, usufruct is the right to use a thing and to collect its profits. That is a significant difference from most easements: the usufructuary may not only use the property but also draw financial benefit from it — collecting rent, for instance, if the property is let, or agricultural produce if it is farmland. In practice usufruct is most often established when a property is passed to close family, for example where parents transfer ownership of a flat to their children but reserve the right to go on using it and drawing its profits until their death.
Usufruct may be established for the benefit of a natural person, which is the most common situation and the one that matters most in property dealings, but also for a legal person, in which case it is governed by somewhat different rules.
How usufruct arises
The provisions on the transfer of ownership apply, with the necessary modifications, to the establishment of usufruct as to other limited rights in rem, with the form of a notarial deed required only for the declaration of the owner establishing the right. The scope of usufruct can be freely limited — by excluding certain profits of the property, for example, or by restricting its exercise to a designated part of the property rather than the whole.
Is usufruct visible in the land and mortgage register
As with the easements described in the previous part, entering usufruct in section III of the land and mortgage register is declaratory, not constitutive. The right arises the moment the agreement is concluded, regardless of whether it was later disclosed in the register. The consequences of a missing entry are the same as with an easement: if the property is sold and a buyer acting in good faith could not have learned of the existence of an undisclosed usufruct, they may acquire the property free of that encumbrance, thanks to the warranty of public credibility of land and mortgage registers.
Can usufruct be transferred to someone else
No. Under Article 254 of the Civil Code, usufruct is non-transferable. The holder cannot sell or otherwise transfer their right to anyone else. This is an important difference from a land easement, which passes automatically to successive owners of the dominant property. The usufructuary may, however, let, lease or lend the thing to a third party, exercising their right in that way, while the right of usufruct itself remains with them throughout.
When usufruct expires
Usufruct can expire in several ways. Under Article 255 of the Civil Code it expires through ten years of non-use. If it was established for a natural person, it expires at the latest on their death, under Article 266 of the Civil Code, regardless of how long a period it was formally established for. It may also expire earlier: through waiver by the holder, or on the lapse of the term, if it was established for a fixed period shorter than the holder’s life.
How the sale of a property affects usufruct
Selling a property burdened with usufruct does not extinguish that right. The new owner must respect it exactly as the previous one did, until it expires — for instance until the holder’s death. The only exception is the situation described above: usufruct not disclosed in the land and mortgage register and a buyer acting in good faith, who may then acquire the property free of that encumbrance.
Effect on value: from slight to almost total loss
Usufruct limited to a small part of the property or to selected profits — the right to use one room, say, or part of a plot — usually reduces the property’s value to a small and readily estimable degree.
The situation is far more serious where the usufruct covers the whole property together with the right to collect all its profits, and was established for a relatively young person. For an ordinary buyer on the market such a property is then practically unusable: they cannot live in it, cannot let it on their own account, and cannot even dispose of it freely to the extent they would expect. The market value of such a property can then fall almost to zero, and in practice only specialist buyers are able to make a realistic offer, factoring into the valuation the holder’s age and the statistically expected remaining duration of the encumbrance.
A curiosity: irregular usufruct
It is worth mentioning in closing a special case, irregular usufruct, governed by Article 264 of the Civil Code. It concerns situations in which the object of the usufruct is money or other things designated only as to kind, rather than a specific property. In such a case the usufructuary becomes the owner of the items received and, once the usufruct expires, is obliged to return them under the provisions on the repayment of a loan. This arrangement does not apply to real property, however, and we mention it only for completeness.
How we can help
At Remedy we buy properties burdened with usufruct, whether it covers a small part of the property or the whole of it together with the right to collect all its profits. We price each case individually, taking into account the scope of the usufruct, its real effect on the ability to use the property and, where relevant, the age of the person entitled. If your property is burdened with usufruct and you are wondering whether it can be sold, write to us and we will look at it together.
This article is for general information and does not constitute legal advice. Assessing a particular case of usufruct requires reviewing the contents of the relevant land and mortgage register, the agreement establishing the right and the circumstances of the case.