Understanding the bare title to property

Understanding the bare title to property

The sale of bare ownership is an option on selling property which enables the seller to continue living in the house until the end of his/her life. That is to say, the seller retains the right of usufruct of the property despite having sold it. This kind of real estate deal, that not everybody knows about, can involve a huge advantage for the seller if the money from the sale is needed and if, on the other hand, he/she cannot afford to move elsewhere. Likewise, if the buyer wishes to acquire property and is in no hurry to live in it, then a bare ownership deal can also mean a good purchase opportunity as the price of these deals are usually lower than those in normal conditions. It is very common for them to be carried out by elderly people, nearly always without an heir, and who need financial liquidity. Even though this type of sale is not very common in Spain, there are more and more cases of property which is sold through bare ownership. We will tell you more about it.

Understanding the bare title to property

LET US PUT OURSELVES IN THAT SPECIFIC POSITION

Let us imagine the following situation: an elderly person without offspring who cannot manage on his/her own and therefore, needs to pay for daily professional assistance but cannot afford it. What option does this elderly person have if he/she does not wish to go to a home for the aged? A very interesting possibility is to sell the Bare Title to Property because then, this person can continue to live in the house even though the ownership has been transfered to the buyer. Furthermore, the seller would receive the money immediately in a single payment the same as if it were a conventional sale. On the other hand, the buyer would have full possession of the property even though the usufruct would remain with the seller till he/she passes away. The seller would bear the ordinary expenses of the property, such as water, electricity and gas, as well as the Real Estate Tax. Nevertheless, we must point out that in some cases, the buyer pays for the Real Estate Tax if that is the agreement by both parties at the time of the sale. On the other hand, the buyer would pay the notarial fees, registration charges and special contributions such as the sewerage network or sidewalk paving, as well as any wearing away of the building. This buyer would even be able to sell again the Bare Ownership Title provided that the right of usufruct is respected with regard to the person who sold it in the first place. If the usufructuary were to change address, then he/she would have the right to rent the house and receive the full payment of the renting even though the property did not belong to him/her.

Understanding the bare title to property

MAKING CALCULATIONS

It is estimated that in Spain in 2018,  around 1.500 bare ownership deals were signed. The figures are low, but however, we must state that these kind of deals have increased lately. The fact that it is not a customary real estate deal, originates a certain level of distrust. However, this circumstance is starting to change. The main cause of suspicion regarding this type of product stems from the lack of knowledge about the, not yet widespread, product. There are many people who ignore the fact that they can sell their house whilst at the same time continue to live in it. Hence, the Bare Title to Property is still not common in the Spanish real estate system. Maybe, in the course of time, this circumstance will change.

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