What is usufruct?
According to Section 1030 of the German Civil Code (BGB), usufruct is the right to use an object such as real estate. As a usufructuary, you have the right to use the house, apartment or land and earn the income from it, such as rent, without being registered as the owner in the land register.
Forms of usufruct
As a rule, a distinction is made between three types of usufruct. In the case of a gratuitous usufruct, the owner transfers a usufructuary right to another person without surrendering the property. This is the case, for example, when a property owner decides that his son may dispose of the rental income.
If the owner gives the house as a gift, but retains the right to live in the property or benefit from the income, this is called a reserved usufruct. This is applied, for example, if parents donate the property to their children during their lifetime.
In the case of a subordinate usufruct, a third person is specified to whom the usufruct passes after the death of the current usufructuary, for example, the children or the partner.
Rights and obligations of the usufructuary and owner
As a beneficiary, you earn profits such as rental income. However, they are responsible for the insurance as well as the maintenance of the property and take over renovations or repairs. You may not encumber the property yourself with a usufructuary right and you may not sell it.
As the owner, on the other hand, you have the right to sell the property at any time even without the consent of the usufructuary. You can also limit the right of use, either in terms of time or by excluding certain rooms from the usufruct, for example. This must be stipulated in the contract. Your obligations include paying for extraordinary maintenance costs such as heating upgrades. In addition, you are responsible for the local authority’s contributions to the local community and development.
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