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In this article, you will find a definition of usufruct, a summary of the rights and obligations of the usufructuary and the bare owner, the different ways of constituting a usufruct, and finally the calculation of the amount of a usufruct.
Usufruct is a legal concept that may seem complex to the uninitiated, but which is actually quite simple to understand when one goes back to the etymology of the word. Indeed, usufruct comes from the Latin usufructus, from usus ("right to use a thing") and fructus ("right to receive the fruits"). Defined by articles 578 to 624 of the Civil Code, usufruct is thus the right to enjoy things owned by another, like the owner himself. It is a real right, i.e. it concerns a thing.
We often hear about usufruct in the real estate world, but it is important to know that usufruct can in theory be established on any kind of movable or immovable property. Thus, it is quite possible to hold the usufruct of a portfolio of shares for example, for which one would receive the dividends, but the right to sell the portfolio would remain the property of another person.
In property law, the usufruct is complementary to the bare ownership, and together they form the property. The bare owner has the right to dispose of the thing, but not to use it and to collect its fruits.
Quite similar to the sale in occupied life annuity, the dismemberment of property between usufruct and bare ownership allows the occupant to continue to live at home. Consult our article to know everything about the occupied life annuity.
The usufruct has necessarily a finite duration, contrary to the right of ownership which cannot be removed by time (it is said that it is imprescriptible). For a natural person, there is life usufruct, i.e. the right is extinguished at the death of the person holding the usufruct. It can also be temporary, in which case it expires at the end of the period for which it was granted. For a legal entity, the usufruct cannot exceed 30 years.
Let us now look in detail at the rights and obligations of the usufructuary on the one hand, and the bare owner on the other.
The main right of the usufructuary consists in being able to live in the real estate object of the usufruct. It is possible to enjoy it reasonably, with his family, during the whole duration of the usufruct. For an elderly person, this can be an excellent solution to continue to live at home, within a framework framed by the law and recorded before a notary.
The usufructuary also has the right to rent out the property and to obtain the benefits, i.e. the rental income. Thus, the day when it becomes preferable to move to a senior residence or an EHPAD, it is quite possible to rent out the property in order to obtain additional income that will help finance the cost of the new home. This is the advantage of the usufruct compared to the Right of Use and Dwelling (DUH). See our article to learn more about the differences between life usufruct and DUH.
The usufructuary must take care of the maintenance repairs of the real estate, according to article 605 of the Civil Code. The good maintenance of the real estate is a condition for maintaining the usufruct. In case of lack of maintenance, the usufruct can cease.
The usufruct is a transferable right: it can be transmitted to another person for free or for a fee. On the other hand, the Right of Use and Dwelling (DUH) is a right which concerns the head of a person, and cannot be transmitted.
Namely, the Civil Code specifies all the rights and obligations of the usufructuary in case of usufruct on a movable property, for example a wood, a farmland, an animal breeding.
For his part, the bare owner also has, of course, a number of rights and duties to respect. To clarify or amend the rules of the Civil Code that apply by default, it is possible to formalize the whole by a contract of dismemberment between the usufructuary and the bare owner.
From a financial point of view, the bare owner must take care of the "major repairs" as defined in article 606 of the Civil Code. These are works on the structure of the building, which allow to maintain the durability of the property, as for example the big walls, the beams and the roof.
When the usufruct expires, whether it is a life usufruct or a temporary usufruct, the bare owner automatically becomes the full owner of the property. He can then enjoy the property by living in it or by renting it.
Il existe trois manières principales de constituer un usufruit: la donation, la succession, ou la cession, par un démembrement de propriété qui est un acte juridique consistant à diviser la pleine propriété en nue-propriété et usufruit.
In the context of a donation, the donor can give the usufruct of a real estate or movable property to a beneficiary, while keeping the bare ownership. The donee then becomes the usufructuary of the property and can enjoy it as he or she pleases, while being obliged to maintain it. At the end of the usufruct, the property reverts to the donor or his heirs.
Dans le cadre d’une succession, l'usufruit peut être légué à un héritier, qui devient alors usufruitier du bien. L'usufruit prend fin à son décès ; il est également possible de prévoir que l'usufruit revienne à un tiers après le décès de l'usufruitier.
Finally, it is possible to sell the usufruct or the bare ownership of a property, at any time, which also allows to constitute a usufruct. For example, for a life annuity sale, an elderly person, who wishes to continue living at home, can choose to sell the bare ownership of his house to obtain a capital and a life annuity, while reserving the usufruct of the property.
It is also by this same mechanism that it is possible to invest in bare ownership in financial products, for example SCPI. During the whole period of dismemberment, the bare owner investor does not receive any income (in particular no rent from the rental of the real estate). In return, this allows the investor to acquire the SCPI units at a discount to the price of the unit. The discount will be all the more important as the duration of the dismemberment is long.
As soon as the ownership of a property is split between usufruct and bare ownership, it is important to know how to calculate the respective value of each right. Indeed, the market value of the property, i.e. the market value that would be obtained by selling the freehold property in its entirety, must be divided in two.
Pour une donation de la nue-propriété, c’est le barème fiscal qui est appliqué pour le calcul d’un usufruit viager. Selon l’âge de l’usufruitier, l’usufruit va correspondre à une fraction plus ou moins importante de la valeur vénale. Si l’usufruit est temporaire, le calcul est différent: l’usufruit est estimé à 23% de la valeur vénale pour chaque période de dix ans.
The donation of the bare ownership to heirs, while retaining the life usufruct, is a common mechanism used to optimize the amount of taxes to be paid on the transmission of a property, since the fees and taxes are calculated only on the value of the bare ownership rather than on the market value of the property. Upon death, the heirs become full owners of the property, without paying additional fees and taxes.
En cas de vente de la nue-propriété d’un bien à un tiers, le calcul peut être différent, puisqu’il s’agira en réalité d’une négociation entre le vendeur et l’acquéreur, basée sur la valeur vénale et l’espérance de vie.
Dans le domaine du droit des successions, l'usufruit est un concept courant. Si le défunt a des enfants nés de son mariage avec le conjoint survivant, ce dernier peut opter soit pour un quart de l'héritage en pleine propriété, soit pour l'usufruit total des biens
En effectuant une donation avec réserve d'usufruit, vous transférez seulement la nue-propriété d'un bien immobilier tout en planifiant et simplifiant votre succession. Vous gardez l'usage du bien et bénéficiez de ses éventuels revenus. De plus, cette réserve d'usufruit permet de diminuer le coût de la donation, puisque celle-ci est calculée sur la valeur du bien.
Les droits de l'usufruitier incluent l'usage du bien, la perception des revenus qu'il génère, le droit de vote dans les assemblées de copropriété et la possibilité de vendre le bien démembré.
Les obligations principales de l'usufruitier comprennent l'entretien du bien, le paiement des taxes foncières et d'habitation, ainsi que le devoir d'agir en tant que propriétaire responsable et diligent.
On considérera plutôt ici les cas où l'usufruit peut prendre fin:
- À la mort de l'usufruitier ;
- Lorsque le délai accordé pour l'usufruit expire ;
- Quand les droits d'usufruitier et de propriétaire se combinent chez une même personne ;
- Si l'usufruit n'est pas utilisé pendant trente ans ;
- En cas de destruction complète du bien objet de l'usufruit.
