Usufruct and right of usufruct: Meaning, benefits, and examples
Right of usufruct - what to bear in mind
Usufruct gives residents the right to use a property as if you were the owner, but you can transfer ownership to someone else. The right of usufruct is often chosen within families and creates more rights than a right of residence for life. Here, a property is given away, for example, but the new owner cannot dispose of it in full and cannot sell it. The advantage is that you, as the user of the usufruct, have your residence as secure as if it were your property.
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Usufruct: Definition according to BGB
In this approach, a usufructuary has the right to live in an apartment or house and use the property as he or she sees fit. This means that renting or leasing is also legal and the user may keep the income from it. According to Section 1030 of the Civil Code, the term refers to the inalienable and non-inheritable absolute right to use an object, right or property. A typical example of usufruct is when elderly persons use the right to transfer a property to their descendants during their lifetime. These benefit from it fiscally, at the same time the parents have a permanent right of residence and cannot be forced to move out. This right is not transferable, so it cannot be sold or given away. It expires automatically upon the death of the usufructuary.
Usufruct right for real estate
There are three different models for the usufruct of real estate, which also differ in terms of inheritance law and tax consequences. In the case of subordinate usufruct, also known as conditional usufruct, the previous owner is granted the usufructuary right. During the transfer after the purchase on a usufruct basis, it is determined who is the subordinate beneficiary of the usufruct right if the usufructuary dies. The conditional usufruct is chosen when the ownership of a property changes and the previous owner simultaneously receives the usufruct on a conditional basis. Once the transfer of the property is complete, the conditional usufruct becomes a fixed right of use. Within the framework of the usufruct of benefit, a usufructuary is a beneficiary when renting or leasing the real estate to third parties. Accordingly, this is not a right of residence, but instead he receives financial benefits from the use of the property. Other variants include quota usufruct, in which the right of use extends only to part of the property or a plot of land, or fractional usufruct, which relates to a co-ownership share, for example if there are several owners of an apartment building.
Right of abode or usufruct
Usufructuary and residential rights are both entered in the land register and thus encumber the property. Both cannot be inherited and continue to exist even in the event of a change of ownership. Differences exist primarily with regard to the rights transferred. The lifelong right of residence only secures very specific claims, for example the right to live in a property. Thus, the right of abode is similar to a tenancy, without rent being paid. In the case of an agreement on a usufruct basis, on the other hand, you have several rights. You are allowed to dispose of a property in the same way as an owner is allowed to, and therefore you can also rent or lease it out. Thus, this is a right of use and not a right of residence. Only wilful destruction or the sale of the object are not permitted also with the usufruct agreement. At the same time, however, they also have the economic responsibility and must, for example, bear any costs incurred themselves. Nevertheless, usufruct provides significantly more advantages than a right of residence.