Selling bare ownership is an increasingly popular transaction in Spain. According to data from the Association of Property Registrars, in 2022, there were 1,657 transactions of this type. This figure represents an increase of 23.7% compared to the previous year.
What does it mean to sell the bare property?
Owning a property involves two concepts. On the one hand, the right to use and enjoy it, that is the usufruct. On the other hand, the ownership. Selling the bare property means transferring the ownership but not the usufruct.
After the sale, the owner becomes another person, natural or legal. But the seller maintains the right to enjoy the property until death or until the time established in the agreement.
This type of transaction, until now unusual in Spain, is generating increasing interest among older people who have retired and are looking for additional income. Similarly, owners experiencing financial difficulties begin to consider selling their bare property.
Regarding payment, there are two possibilities:
• Receive the entirety in a single payment.
• Receive a monthly income for life or a determined period.
Advantages and disadvantages of the usufructuary
The advantages for those who decide to sell the bare ownership are three:
• Obtain cash flow immediately or revenue that complements the income and allows maintaining their lifestyle.
• Maintain the right to live on what has been their property.
• Lease and even transfer the usufruct without the authorization of the new owner.
However, it can also have some drawbacks. The main one is that obligations are the same. For example, they share property expenses. The usufructuary must take charge of the maintenance of the property and the payment of the IBI (property tax).
Further, the payment set will depend on different factors. The older the usufructuary, the closer the money received will be to the market price of the property or the higher the life annuity will be. The location of the home and its possible revaluation in the market are fundamental elements too.
Advantages and disadvantages of the bare owner
For those who acquire bare ownership, the main advantage is the possibility of buying a property for a lower price than the market one. In this type of transaction, the discount starts at around 20% but can increase depending on the seller's age.
On the other hand, the owner has the right to mortgage or sell the bare property as long as they respect the usufructuary's rights. And it is allowed to carry out works and improvements, respecting said rights.
Usually, we think of purchasing bare ownership as an investment opportunity. Nevertheless, even when the seller is a person of an advanced age, we must consider that Spain is among the countries with the highest life expectancy. This fact may imply the impossibility of using the property in the short or medium term.
Moreover, the new owner assumes obligations, such as paying taxes, tributes, community expenses or extraordinary repairs.
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