Usufruct and bare ownership in Spain

Owning a property can raise many questions, especially if you are doing so in Spain where the system is often different and has its own peculiarities. Selling or buying bare ownership of a property is one particular way to own a property that may not be familiar to foreign buyers, and means entering into a real estate transaction without involving the right to live within the walls of the house in question. There are many variables to take into account and there are also certain questions that will arise: What does usufruct mean in Spain? What is bare ownership in Spain? What does it mean to be the owner of a property? This is everything you need to know about bare ownership in Spain, known in Spanish as "nuda propiedad". 

Bare ownership Spain: what is it and how does it differ from usufruct?

What does bare ownership mean in Spain? The bare ownership is the right of a person (bare owner) over a thing of which he/she is the sole owner, with the limitation of not having the right to its possession and enjoyment, which will be the rights of the third party who has the usufruct. In other words, the bare ownership of a property in Spain is only related to the ownership rights over the property, and does not imply any type of right of use or enjoyment over it. This type of property ownership has both pros and cons and is often a popular option for pensioners who choose to tap into their wealth in this way. 

Usufruct, on the other hand, is the right of enjoyment, use and enjoyment of someone (usufructuary) over a thing.

There is a third case, full ownership, which implies that both cases, bare ownership and usufruct, are held by the same person.

What rights does the bare owner have?

Let us begin by naming the rights of the bare owner. Bearing in mind that bare owner does not have any power over the property in question, he/she is simply its owner:

• Right of ownership: The bare ownership of the property, as mentioned, he does not have the right of use and enjoyment.
• Right to sell the bare ownership: He can also sell the bare ownership to a third party, but as long as the rights of the usufructuary are respected. Article 489 of the Civil Code states that "the owner of property in which another has the usufruct may dispose of it but may not alter its form or substance, nor do anything to it that would be detrimental to the usufructuary".
• Right to mortgage the bare ownership: According to the provisions of Article 107.2 of the Mortgage Law, a mortgage loan can be taken out on the bare ownership of the usufructuary estate. If, when the usufruct is extinguished, the full ownership is consolidated in the mortgagor, the mortgage will also extend to the usufruct, unless otherwise agreed.  
• Right to carry out works and improvements: According to article 503 of the Civil Code, works and improvements may be carried out on the dwelling over which the bare ownership is held, as long as they do not harm the usufructuary.
• Right to restitution of the use and enjoyment of the dwelling when the usufruct has been extinguished: Article 522 of the Civil Code indicates that, "once the usufruct has ended, the usufructuary shall hand over to the owner the thing usufructuated, except for the right of retention that corresponds to the usufructuary or his heirs for the disbursements that must be reimbursed. Once the delivery has been made, the bond or mortgage shall be cancelled".

What are the obligations of the bare owner in Spain?

The obligations of the bare owner are as follows:

• To take charge of extraordinary repairs to the property, in this case, the dwelling: According to article 501 of the Civil Code, extraordinary repairs will be at the owner's expense. "The usufructuary is obliged to notify the owner when it is urgently needed", explains the article.
• Respecting the right of the usufructuary: Article 489 of the Civil Code states that the bare owner "may not alter the characteristics of the thing usufructuated, nor carry out acts that prejudice the right of the usufructuary".
• Payment of the taxes and duties corresponding to the usufruct: Article 505 of the Civil Code emphasises that the bare owner has the obligation to pay the taxes and duties corresponding to the property, with the exception of the Real Estate Tax, which will be paid by the usufructuary.
• Paying the mortgage of the usufructuary: According to article 509 of the Civil Code, the usufructuary of a mortgaged property "shall not be obliged to pay the debts for the security of which the mortgage was established" and, if the property is seized or sold judicially for the payment of the debt, "the owner shall respond to the usufructuary for what he loses for this reason".
• To be liable to the usufructuary: The bare owner must be liable to the usufructuary if the property is seized or sold to pay a debt.
• Paying community expenses: The Supreme Court, in a judgement of May 2005, states that "this is an obligation imposed not on the users of a property, but on its owners".

How is a bare ownership in Spain acquired?

The most common way of acquiring the bare ownership in Spain is when someone inherits the bare ownership of a property, reserving the right of usufruct for the widowed spouse.

It is also common to acquire the bare ownership by means of a donation with reservation of usufruct, a mechanism through which the donor transmits the bare ownership to the donee, but reserves the usufruct for life of the property.

Another case could be when the owner of a property sells the bare ownership and reserves the usufruct. People who opt for this solution are usually elderly people who have no heirs or are in need of financial resources. In this way, they secure the use of the property, generally for life (during their lifetime) and receive financial compensation.

Bare ownership in Spain: when use and enjoyment is acquired

Full ownership of a usufruct property is consolidated when ownership and use and enjoyment are combined in the same person. Consolidation of full ownership occurs when one of the following cases occurs. Sale of the usufruct: In the event that the usufructuary decides to sell his usufructuary right, it is most common to sell it to the bare owner. There is also the case of extinction of the usufruct, which can be due to three causes:

1. Death of the usufructuary: When the usufructuary dies, the enjoyment, use and use of the property passes to the bare owner. In the event that the usufruct corresponds to several persons in joint ownership, the bare owner does not receive full ownership until the death of all the usufructuaries.
2. Fulfilment of the term for which it was constituted: In the event of the death of the usufructuary before the stipulated term, the use of the usufruct shall also pass to the bare owner, unless otherwise agreed.
3. Fulfilment of the conditions stipulated in the usufruct agreement: If the usufruct is granted until the bare owner, for example, marries, the bare owner will receive full ownership after marriage.

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