Bare ownership: how it works and what the advantages are

Bare ownership can be a great opportunity

If you are thinking of selling your home, but you do not intend to leave it, or if you want to buy a home but are in no hurry to occupy it, selling the bare ownership of a house could probably be the solution best suited to your needs. Bare ownership has become an increasingly well-known practice over time and offers a different way to sell or buy a home.

What is bare ownership?

You are probably wondering, “What does buying bare ownership mean?” In legal terms, the meaning is as follows: a property right “limited” by another person’s real right to enjoy the asset, namely usufruct. So, in essence, Tizio, the bare owner, holds title to the property, but the person who can use it is Caio, the usufructuary. In almost all cases, the right of usufruct lasts for the lifetime of the usufructuary. In other words, those who sell the bare ownership of their home immediately receive payment of the sale price while continuing to live there.

How does it work?

Selling the bare ownership of a house makes it possible, despite the sale, to retain the right of usufruct. Only upon the death of the seller will the usufruct be extinguished, 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 why someone decides to sell a house in this way. The main reason is an economic motivation: it is usually elderly people who turn to our agencies to obtain liquidity from the sale while continuing to live in their home. This is the most frequent situation.

Why buy the bare ownership of a house?

For those who want to buy, the reasons may also vary. Some people are looking for long-term investments and are in no hurry to obtain full ownership of the property. It is a perspective that requires a certain risk appetite, but over time it can generate economic and financial advantages. Another case may involve families who wish to secure a residence for themselves or for their children, from a medium- to long-term perspective.

The main advantages

This type of transaction can offer a solution suited to both sellers and buyers, allowing both parties to enjoy financial and economic benefits: in particular, on the one hand, the sale of bare ownership guarantees a substantial financial income while at the same time allowing the seller to continue living in their own home; on the other hand, the purchase of bare ownership makes it possible to become the owner of a property at a lower price than the usual sale price of full ownership.

The saving on the actual value is determined first of all by the owner’s wishes and request, and secondly by the probable waiting time before full ownership is obtained, and therefore by the owner’s age. The value of the saving is in fact inversely proportional to the life expectancy of the usufructuary: the older the seller is, the lower the saving compared with the purchase of full ownership. For those intending to sell, in practice, nothing changes: they can continue living in their home. Those who retain the usufruct may also rent out the property, securing an additional income. The sale will affect any heirs, since the property sold will no longer be part of the inheritance.

Rights and duties provided for

To conclude, here is a brief summary of the rights and duties of both those who buy and those who sell a property in bare ownership.

Rights and duties for the buyer:

• Right to future full ownership: the buyer has the right to become the full owner of the asset upon the extinction of the usufruct.
• Duty of payment: the buyer is obliged to pay the agreed price for the purchase of the bare ownership.
• Duty of maintenance: depending on the contractual provisions, the buyer will have to bear the costs of extraordinary repairs to the property.

Rights and duties for the seller:

• Right of usufruct: the seller sells the bare ownership of the asset while retaining the right of usufruct — and therefore the right to enjoy it.
• Right to receive the price: 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 asset to the buyer in accordance with the provisions of the sale agreement.
• Duty to respect the economic purpose: the usufructuary cannot change it; a residential property 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.