Bare ownership exists when the owner’s power to dispose of the property is restricted, while the right to use and enjoy the fruits of the property is called usufruct. Ownership is, as a rule, full — meaning the owner is fully permitted to use and enjoy the fruits of the property. Sometimes, however, ownership is stripped (denuded) of these elements and is limited to the owner’s power to dispose of the property (power of disposition). In such cases, ownership is called bare ownership, and the right to use and enjoy the fruits of the property is called usufruct.
When a usufruct is established, the bare owner retains ownership, while the usufructuary has limited authority over the property (use and enjoyment of fruits) without being able to impair the owner’s right and with the obligation to preserve the substance of the property intact. Usufruct may be established by contract (e.g. sale, donation, parental gift), by will, or by acquisitive prescription; it may concern benefits arising from part or the whole of the property and may apply for a definite period (e.g. for as long as the usufructuary lives).
Bare ownership (not full ownership) is transferred by the owner without the usufructuary’s approval; the reverse, however, does not apply to usufruct. Because usufruct is a personal servitude, it ceases to exist (is extinguished) upon the death of the usufructuary or upon their waiver of the right; and unless otherwise stipulated, it is non-transferable and may therefore be mortgaged.
Finally, a usufruct may also be established over a right.
- Read the article Inheritance Law Lawyer
- Read the article Contesting a Will
FREQUENTLY ASKED QUESTIONS ON BARE OWNERSHIP AND USUFRUCT
1. What does buying the bare ownership of a property mean in practice?
When someone buys bare ownership, they acquire the property but without the right to use it or exploit it until the usufruct is extinguished (usually upon the death of the usufructuary). In practice, the bare owner cannot live in the property, lease it out, or collect rents. They do, however, retain the power of disposition, meaning they can sell or mortgage it without affecting the usufructuary’s right. Before signing the deed, careful legal due diligence is needed to determine which obligations burden each side (common expenses, ENFIA, repairs).
2. Who pays ENFIA, common expenses and repairs on the property?
As a rule, the usufructuary bears the running costs of the property: common expenses, utility bills, minor maintenance repairs, as well as the larger share of the Real Estate Property Tax (ENFIA) (approximately 80%), while the bare owner is charged with a smaller share. Major, extensive repairs and the restoration of damage caused by force majeure are borne by the bare owner. The usufructuary has the obligation to keep the substance of the property intact, otherwise they are liable for damages. These allocations may be regulated differently in the contract establishing the usufruct.
3. Can the bare owner sell the property without the usufructuary’s consent?
Yes, the bare owner may freely transfer the bare ownership without requiring the usufructuary’s approval. The new buyer, however, again acquires only bare ownership, and the usufruct right remains unchanged until its extinction. In practice, the purchase of bare ownership of an encumbered property has significantly reduced market value, since the new owner cannot exploit the property. Conversely, the usufructuary cannot transfer their right unless this was expressly provided for at the time of establishment, since usufruct is, as a rule, a personal and non-transferable right.
4. When is usufruct extinguished and how is full ownership restored?
Usufruct is extinguished principally upon the death of the usufructuary, by waiver of the right, by the expiry of the term if it was established for a definite period, or by merger when the usufructuary also acquires the bare ownership. Upon extinction, the bare owner automatically acquires full ownership, without the need for a new notarial deed. However, a declaration to the National Land Registry (Κτηματολόγιο) and the tax office (death certificate, sworn statement, etc.) is required so that the public records are updated and the change is reflected in the title deeds and in the ENFIA.
5. Does a parental gift with reservation of usufruct offer tax benefits?
Yes, the transfer of bare ownership with reservation of usufruct by the parent is one of the most widespread practices of family tax planning. The value of the bare ownership is calculated based on the age of the usufructuary and is lower than the full value of the property, so the parental gift tax is significantly reduced. Moreover, the parent retains possession and use of the property for life. When the usufruct is extinguished upon death, the child acquires full ownership without any new transfer tax. Proper tax treatment and the drafting of the deed require careful legal planning.
6. What is the role of the lawyer in bare ownership and usufruct cases?
The lawyer thoroughly reviews the title deeds and entries in the National Land Registry, identifies any encumbrances or claims, and assesses the risks before purchase or acceptance of inheritance. They draft or review the contract establishing the usufruct, so as to clearly regulate matters of expenses, repairs, leasing, and possible transfer. In the event of a dispute between the bare owner and the usufructuary (e.g. damage, unauthorised use, neglected maintenance), the lawyer represents the client before the civil courts. They also handle the procedure for restoring full ownership after the extinction of the usufruct.