Imagine being able to legally use someone else's property - to generate income, produce or even rent - without paying a penny yourself. Sound like a rental agreement? Not quite. The Civil Code provides for a far more interesting and less frequently mentioned mechanism : usufruct.
A usufruct is a right in rem granted for the lifetime of a person or for a specific period of time (no longer than the usufructuary's lifetime). It allows you to use and benefit from another's property. It is usually established in order to ensure the maintenance of a particular person or to improve his/her living conditions.
According to Rokas Puodžiūnas, a lawyer at AVOCAD, the uniqueness of this right is that it is linked not to the owner, but to the object itself. This means that even if the owner changes, the usufruct does not change - unlike in ordinary contractual relationships.
How is usufruct created?
According to the lawyer, usufruct can cover both movable and immovable property. This right can arise in three ways: by law, by court decision or by transaction.
An example of a statutory usufruct is the property of minor children. "Although parents do not have a property right over their children's property, they need a legal basis to manage that property. That is why the law provides that in such cases parents act as usufructuaries - they manage their children's property with usufruct rights, even though they do not own it as owners themselves", says Rokas Puodžiūnas.
A usufruct can also be established by a court decision, usually in the context of family law. For example, in the event of a divorce, the court may grant the right to use the living space to the spouse with whom the minor children are staying, even if the other spouse owns the space.
However, usufruct is most often created by a transaction - a contract or a will. It can only be established by the owner of the property. In the case of immovable property, the contract must be notarised and the rights and obligations arise only when the usufruct is registered in the public register. In the case of movable objects, where registration is not compulsory, the usufruct comes into force from the moment of transfer of the object itself.
Rights and obligations of the usufructuary
The most important right of a usufructuary is to use and benefit from the object: fruit, produce or income. The specific rights are defined by the usufruct itself, but in the absence of this, the usufructuary is presumed to use the object as a careful owner would. "Although he cannot transfer the usufruct itself to another person, he may allow a third party to use the object - for example, to rent it out. In such a case, any income generated belongs to the usufructuary. It also gives the usufructuary the right to demand the fulfilment of obligations related to the usufruct object and to receive the corresponding payments," emphasises Rokas Puodžiūnas.
Lawyers point out that rights come with responsibilities. The usufructuary must use the property responsibly, ensure its preservation and, if necessary, carry out routine repairs. He must pay taxes and other charges relating to the object in proportion to the benefit he receives, unless the law or a contract provides otherwise. He must also notify the owner of any damage to the object, of the need for major improvements or repairs, of the need to protect the property from danger and to inform him if third parties assert rights over the object. The usufructuary must pay the owner once a year for the use of the object and, in certain cases, must insure the object.
AVOCAD's lawyer stresses that the usufructuary only pays taxes that are directly related to the property. This is also confirmed by case law. In one case, the owner asked for the abolition of a usufruct because the usufructuary had not paid for the management and maintenance of the apartment and the common areas. "However, the court clarified that such costs are not directly related to the apartment as the object of the usufruct, and are therefore the responsibility of the owner, not the usufructuary," Rokas Puodžiūnas notes.
End of usufruct
Like any right, usufruct is not forever. It can end on various grounds, both by the will of the usufructuary and by objective circumstances. The simplest case is when the usufructuary waives the right in writing, but such a waiver is valid only for the benefit of the owner. The usufruct also terminates automatically upon the death of the usufructuary, as the right is not heritable, or upon the dissolution of the legal person, if the right was created for it. There is also a time limit for legal persons: the usufruct is no longer valid after thirty years.
Sometimes the end of the usufruct is linked to a specific term or condition. For example, one parent may be granted usufruct in the other parent's home until the child reaches the age of eighteen - at the age of majority, this right automatically ends. It also ends if the usufructuary becomes the owner of the object, if the object dies or if it deteriorates to such an extent that it can no longer be used for its intended purpose.
The law also sets limitation periods. If the usufructuary does not use the movable object for three years or the immovable object for ten years, the usufruct ends automatically. Furthermore, usufruct can also be revoked by a court decision if the grounds for doing so are provided for by law.
AVOCAD's lawyer also points out that a court decision can only abolish usufruct where the law so provides. When this right ends, the usufructuary is obliged to return the object to the owner in the same condition as when it was received, taking into account normal wear and tear, unless otherwise agreed at the time of the usufruct. If the usufructuary has improved the object, he may retain those parts of the improvement which can be separated without causing damage. If the improvements are inseparable, the usufructuary may claim reimbursement of their cost, but only to the extent of the increase in the value of the thing and only if the improvements were made with the consent of the owner. If the usufruct has been registered, its termination is also linked to the moment of deregistration.
In summary, usufruct is a special property right that allows you to use someone else's property legally and free of charge. It is linked to the object itself, so that if the owner changes hands, the right remains in force. Usually, usufruct is established by the will of the owner in order to ensure the needs or well-being of a neighbour. "This overlooked option of the Civil Code can be a wise decision when planning a family estate or ensuring the quality of life of a loved one", says Rokas Puodžiūnas. Therefore, it is always worth consulting a lawyer before making a decision on usufruct, as this unique right will become a reliable tool rather than a problem.
