Bare Ownership in Italy: how it works and what are the advantages

Bare ownership can be a great opportunity

If you are thinking of selling your house but have no intention of leaving it, or if you want to buy a house but are in no hurry to move in, selling the bare ownership of a house could be the best solution for your needs. Bare ownership has become an increasingly popular practice over time and offers a different way to sell or buy a house.

What is bare ownership?

You are probably wondering, “What does it mean to purchase bare ownership?” The legal meaning is as follows: a property right “compressed” by another person's real right to enjoy the property (usufruct). So, in essence, Mr. X, the bare owner, is the owner of the property, but the person who can use it is Mr. Y, the usufructuary. In almost all cases, the right of usufruct coincides with the life of the usufructuary. In other words, those who sell the bare ownership of their home receive immediate payment of the sale price while continuing to live there.

How does it work?

Selling the bare ownership of a home allows you to retain the right of usufruct despite the sale. Only upon the death of the seller will the usufruct expire, and the “bare” owner will become the “full” owner, at which point they will also be able to enjoy the use of the property.

Why sell the bare ownership of a house?

There may be several reasons for deciding to sell a house in this way. The main one is financial: it is usually elderly people who turn to our agencies to obtain liquidity from the sale and at the same time continue to live in their home; this is the most common situation.

Why buy the bare ownership of a house?

There can also be various reasons for those who want to buy. Some are looking for long-term investments and are in no hurry to obtain full ownership of the property. This is a prospect that requires a certain appetite for risk, but over time it can generate economic and financial benefits. Another case may concern families who wish to secure a residence for themselves or their children in the medium to long term.

The main advantages

This type of transaction can offer a solution that suits both sellers and buyers, allowing both to enjoy financial and economic benefits: in particular, on the one hand, the sale of bare ownership guarantees a substantial financial income, but at the same time allows you to continue living in your own home; on the other hand, the purchase of bare ownership allows you to become the owner of a property at a lower price than the usual sale price of full ownership.

The savings on the actual value are determined first and foremost by the owner's wishes and demands, and secondly by the likely waiting time for full ownership, i.e., the owner's age. The value of the savings is in fact inversely proportional to the life expectancy of the usufructuary (the older the seller, the lower the savings compared to the purchase of full ownership). For those who intend to sell, in practice there are no changes, they can safely remain in their home. Those who retain the usufruct can also rent out the property, guaranteeing themselves additional income. The sale will have an impact on any heirs, as the property sold will no longer be part of the inheritance.

Rights and obligations

To conclude, here is a brief summary of the rights and obligations for both buyers and sellers of bare ownership properties.

Rights and obligations for the buyer:

• Right of future full ownership: the buyer has the right to become the full owner of the property upon expiry of the usufruct.
• Obligation to pay: The buyer is obliged to pay the agreed price for the purchase of the bare ownership.
• Obligation to maintain: Depending on the contractual provisions, the buyer will have to bear the costs of extraordinary repairs to the property.

Rights and obligations for the seller:

• Right of usufruct: The seller sells the bare ownership of the property, retaining the right of usufruct—and therefore of enjoyment—of the same.
• Right to receive payment: The seller has the right to receive the agreed price for the sale of the bare ownership.
• Duty of transfer: The seller has the duty to transfer the bare ownership of the property to the buyer in accordance with the provisions of the sales contract.
• Duty to respect the intended use: the usufructuary cannot change it (a dwelling must therefore remain as such).
• Duty of ordinary maintenance: the costs of these repairs remain the responsibility of the usufructuary.

If you have reached the end of this article, you are probably interested in buying or selling the bare ownership of a property. For this reason, we invite you to contact us to request a consultation.