What is the right of use?
A right of use is a limited property right that includes the right to use another's property in accordance with its intended use and the right to obtain benefits from it without substantially altering it. When a right of use is established over immovable property, the contract must be concluded in the form of a notarial deed.
The right of usufruct most often arises on the transfer of property by purchase, by gift (e.g. where a person donates property but retains the right of usufruct for life) or in return for a maintenance and care obligation.
By creating a right of usufruct, the owner of the property is 'deprived' of one of his essential powers, which is why ownership is called 'bare property' (nuda proprietas). He has no possibility to possess his property nor to use it, but he can dispose of his property.
The possibility that this right may be held separately from the title means that it may be retained in a transfer of bare ownership by the transferor-owner. It is irrelevant whether it is created by a legal transaction or acquired by prescription or retained by the transferor-owner. In all three cases, it enjoys legal protection and obliges all third parties, including the owner of the property, to comply with it, and it cannot be treated as a restriction on the right of ownership.
What are the rights and obligations of the occupier?
The right of usufruct includes in its content two main powers - to possess the property of others and to use it, including to receive the proceeds thereof. The right of usufruct allows the holder to acquire both the natural and civil fruits of the property (e.g. the rents from the property if he rents it out).
The right of use in rem is no different from that of the owner, and it should be understood as any form of factual and legal use of the property - permanent or temporary residence, a place to store personal belongings, to carry out activities related to everyday life, business activities, etc.
The right of usufruct allows the usufructuary to grant the use of the property to another person in the form of rent, as well as in the form of a loan for servitude and, accordingly, to exercise the right through another. But transactions of disposition such as mortgage and pledge are not permissible because the usufructuary cannot transfer his right.
In addition to rights, the usufructuary is subject to a number of statutory obligations, the most important of which is to take care of the property as a good steward. The bearer of the property right is obliged to pay the expenses related to the use (laying of irrigation water pipeline, fencing, etc.), including taxes and other charges (property tax, garbage tax, electricity, water, etc.), to maintain the property in the condition in which he accepted it, and to return it to the owner after the termination of the right of use.
It shall be the duty of the occupier to insure the property for the benefit of the owner and to pay the premiums for the insurance unless otherwise stipulated or agreed.
Termination of the usufruct
The right of usufruct shall terminate on expiry of the period agreed by the parties in the deed.
An essential feature of this right in rem is that it is not inherited by the usufructuary's heirs. Where the right of usufruct is granted to a natural person, it shall be extinguished on the death of the usufructuary, unless it is granted for a shorter period. This is because the right of usufruct created is non-transferable and is created only by the owner of the property.
Since the owner loses the possibility to use and possess his property personally by establishing a right of usufruct, and at the same time the wear and tear of the property is at his expense, it is not irrelevant for him which legal entity will use the property. Therefore, whether the right of usufruct is granted to a natural person or to a legal person, it retains its character as a right granted in respect of the personality of the usufructuary. The right of usufruct may not be transferred by express order of law and is extinguished by the death of the natural person.
It is important to note that lease contracts concluded by the usufructuaryare terminated by the extinction of the right of usufruct itself, including upon the death of the usufructuary.
The right of usufruct is extinguished if it is not exercised for 5 years.Unlike the right of ownership, which cannot be lost if it is not exercised, the limited right of use in rem lapses if the user has become disinterested in the property. The purpose of this rule is to create certainty in the legal world in so far as, when a right of use is established in respect of a property, its owner is deprived of its use. Failure to exercise this right for a period of 5 years extinguishes it and turns the "bare owner" into a full owner.
The material is informative and does not constitute a legal opinion or legal advice. If you need advice or assistance in connection with the transfer of real estate, the preparation of contracts for the establishment of the right of use or representation in cases concerning the right of use, can be contacted at tel. + 359 876 267 112 / + 359 897 977 338 or through any of other contact channels of Vatev & Partners Law Office.