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Article copyrighted © 2022. Plagiarism will be criminally prosecuted.
By Raymundo Larraín Nesbitt
Lawyer - Abogado
21st of May 2022
It has become apparent to everyone that we have fallen on hard times. The ongoing war in Europe (which threatens contagion to neighbouring countries), the rising inflation, the hike in taxes, hike in petrol, hike in electricity & gas, the ongoing Covid-19 restrictions, and more all add up to our woes!
But none fair harder than those in their senior years. They are hands down the most affected collective with all that is going on.
Many senior citizens struggle to get by on low pensions given the unbridled rise of prices (two-digit inflation). All they know is that each month they can afford fewer things with the same fixed amount of money.
But precisely because of their age, they are likely sitting on properties which value has gone up substantially over the previous years. Moreover, in a high inflationary context, money experts strongly advise investors to buy property to hedge themselves against inflation, so their property values are bound to increase further over the next years.
Unbeknownst to them, there is a way to tap into their wealth without needing to sell the property, much less leave their home.
This is known as selling the ‘bare ownership’ to an investor whilst retaining a ‘life usufruct’ on the property. This is a legal procedure witnessed by a notary. In simple terms, bare ownership grants ownership of a property but does not grant possession.
Pros
- The seller is allowed to remain in the property for as long as they live. In other words, the seller retains the possession. This, for senior citizens, is a huge bonus as they will not have to renounce to their lifestyle or where they live.
- The seller access immediately a large pool of money which they can use as they see fit: for medical expenses, lavish holidays, fancy restaurants, or simply as a well-deserved improvement to their lifestyle in their twilight years.
- The seller no longer needs to trouble himself with paying property taxes or community charges, as it now falls on the investor to pay them all.
- You will only need to pay electricity and water bills.
- The seller can in fact rent out the property, or part of it (i.e. rooms), and pocket the money!
- The seller can in fact also sell his usufruct right, if needed be, to raise even more money!
- This procedure allows you to supplement and bolster a meagre state pension.
Cons
- You will receive slightly less money than its market value.
- If the seller has children, they will receive less by way of inheritance.
Conclusion
Selling only the bare ownership is a (very) smart way of cashing in on the accumulated wealth of your property without renouncing to your lifestyle. Because in truth, you won’t notice any difference other than sitting on a large pile of money!
On following this legal procedure, the owner avoids enduring all the associated hassle and aggravation of a standard property sale but reaps all its benefits! That is why this procedure is ideal for senior citizens who are asset rich, but cash poor.
For a seller, it’s a win-win as you get to keep your property (whilst you live) and you also have access to a large pile of cash with which you can do as you please.
For an investor, it is a win-win as they get to buy a property below the market value (BMV) and also do not pay inheritance tax on receiving the possession of the property in the future.
We advise you to retain a law firm -such as ours- to represent and defend your interests.
If you are interested in applying for such a loan, please contact us.
At Larrain Nesbitt Abogados we have over 19 years’ experience buying, selling, and renting properties. We are also specialized in immigration & residency visas. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88, or by completing our contact form to book an appointment.
Larraín Nesbitt Abogados, small on fees, BIG on service.
Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.
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