How can you renounce a usufruct?

Question

José Manuel Alburquerque · Accepted Answer

It is enough for the usufructuary to decide to do so. The bare owner does not need to accept it and, as from the renunciation, becomes the full owner. If the usufruct is over a home or another registered property, the usual course is to make the renunciation in a deed before a notary, because that is what allows the usufruct to be removed from the “Registro de la Propiedad”, the Land Registry. The renunciation cannot prejudice the usufructuary's creditors or anyone who has rights over the usufruct, such as a bank that holds a mortgage over it. It also has tax consequences for the bare owner, which should be worked out before signing. How it is done The “Código Civil de Cataluña”, the Catalan Civil Code, allows the holder of a right over someone else's property, such as a usufruct, to renounce it simply by deciding to do so. It does not require any particular form. But if the usufruct is recorded at the Land Registry, a public deed is needed to have it removed from the register. The usual steps are as follows: Request a land registry extract (“nota simple”), the summary issued by the Land Registry showing who owns the property and what charges it has, to see how the usufruct is recorded and whether it is itself subject to any charge, such as a mortgage or an attachment (seizure). Sign the deed of renunciation before a notary. The usufructuary's signature is enough, although the bare owner can also sign it to record that they are aware of it. File the relevant tax returns and register the deed at the Land Registry. From then on, the register shows that the bare owner has full ownership. If the usufruct is over other assets, such as money or shares, the law does not require any particular form, but it is advisable to make the renunciation in writing and give it to the bare owner and to the institution that holds the assets. Once made, the renunciation cannot be undone. Renouncing outright or in favour of someone An outright renunciation, with nothing more, brings the usufruct to an end. The bare owner becomes the full owner and can now use the asset and collect any income from it. A renunciation “in favour of” a particular person is in fact a transfer of the usufruct. If it is free, it is a gift. If a price is charged, it is a sale. Made in favour of the bare owner, it has the same effect as an outright renunciation. Made in favour of someone else, that person becomes the usufructuary and, if they pay a price, the bare owner has a preferential right to acquire the usufruct. Renunciation also has its limits. The Catalan code says that a renunciation made in fraud of the usufructuary's creditors or to the detriment of third parties' rights is not valid. So someone with debts cannot renounce in order to prevent the usufruct or its income from being attached. If the usufruct was mortgaged, the mortgage continues until the time when the usufruct would have ended without the renunciation. Taxes Renouncing is not neutral as far as the tax authorities are concerned. The bare owner receives the use and the income that the usufructuary had. That may mean they have to pay tax. How much depends on the case, for example on how the bare ownership was acquired, on the usufructuary's age or on whether the renunciation is free or in exchange for money. If the renunciation is in favour of someone else, the person who receives the usufruct also pays tax. That is why it should be worked out before signing, because afterwards there is no going back. If the usufruct comes to you from an inheritance you have not yet accepted, it is not a matter of renouncing a usufruct but of not accepting what the inheritance leaves you. That is a different question, with its own rules, tax included. Under the Spanish Civil Code (“Código civil”), which applies in most of the rest of Spain, a usufruct can also be renounced, subject to the same limit of not prejudicing third parties.