Bare ownership “usufruct” in Spain / Jacques Olivier Marbella
Using Bare Ownership and Usufruct Right to Cashing in Property Value
Bare ownership arrangement is an attractive property deal that is favorable to senior citizens wanting to cashing on value of property to supplement the pension income without affecting their life style.
What is Bare ownership ?
Bare ownership is real estate transaction that allows a person to sell a property but keep the right to continue enjoying and living in the property. The seller has the usufruct of the house, so he or she can continue to live in it and also rent it out until the time of death.
It is called “usufruct” meaning that the seller has the usufruct of the house, so he or she can continue to live in it and also rent it out. In other word, it is transfer of the ownership of the property to a buyer without granting the possession, the seller has the right to occupy and use the property for the rest of his/her life or until the fixed time period for the occupation expires.
Bare ownership is a legal real estate transaction recognized under the law and provide protection to sellers against unscrupulous investors who may try to take possession of property and deny the seller the right to peacefully continue enjoying their property while still alive or until specified stated time expires. The buyer (bare owner) can sell the property to another person but the right of the seller to continued enjoying the use of the property is never interfered with.
Important to know …
Bare ownership transactions include usufruct part that requires the buyer and seller to understand the contract terms they are entering into. Usufruct grants a person the right to use and enjoy property owned by another person (bare owner) and requires the person occupying the property (the seller) to assume and maintain the property in its from. The terms of usufruct can be modified from onset and all the bare ownership transactions need to be analyzed on individual cases to ensure the buyer and seller understand the terms they are entering into. The obligations that fall under the buyer (bare owner) must be clearly stated and some of the standard obligations include paying land rates and meeting thecost for extraordinary repairs.
– The usufruct may be for specified time, or for life.
– The factors considered when determining the pricing of the property include the age of the seller and the duration of the fixed time the seller may continue enjoying the use of the property. When signing a contract, a seller is presented with different option of how he/she may want to receive the cash.
– The the age of the seller and expiration of the fixed time set time for seller to continue enjoying the property is considered when granting the seller different options to receive the cash. Taking into consideration of a seller financial goal, a seller may decide to receive a lump sum payment or opt to receive installment payments paid on set intervals until the death or until fixed period expires.
– This is a win-win situation for both the buyer and seller because the buyer gets the property at a price below the market value and the seller gets access to the much-needed cash.