Nowadays, the establishment of a right of use is most often applied when a person wants to transfer the ownership of his real estate to a third party but at the same time to guarantee that he will be able to inhabit the property for the rest of his life.
What does right of use of real estate mean?
The right of use provides the user the opportunity to use the owner’s real estate with a priority. Practically, this means that if property “X” is owned by person “A”, but person “B” has an established right of use over that property, then as long as person “B” right of use is in force, he will be legally entitled to use the property, not the owner.
In other words, the right of use provides the user superior rights than the owner’s rights regarding the occupation of the property. For this reason, in the practice, the right of use is considered as an encumbrance over the owner’s property.
If you own a real estate (for example an apartment) on which there is a valid right of use, you can technically sell the apartment, but it is unlikely that anyone would buy it. The reason? The new owner would not legally be able to live in the purchased property while the third party’s right of use is in force.
How is a right of use over a real estate established?
The right of use over a real estate can only be established by a notary deed, which shall be inscribed in the Real Estate Register. Most often the right of use is established as part of another transaction.
For example, person “A” owns apartment “X” which he wants to donate/sell to person “B”. At the same time, person “A” wants to ensure that after the sale he/she will be able to live in the property undisturbed (for a certain period or for life). Thus, most often in the notary deed for sale/donation through which person “A” transfers to person “B” the ownership of apartment “X”, there is an explicit provision that person “A” retains the right to use the property.
There is no obstacle the right of use to be established with a separate notary deed.
The right of use may be either gratuitous (without the user owing a price to the owner) or remunerative (under payment of a sum). The right of use may be established for a fixed period (in days, weeks, months or years) or may be indefinite (for the lifetime of the user).
Is the right of use of real estate inheritable?
The right of use of real estate is not inheritable.
It is established in respect of the personality of the user and therefore cannot automatically pass to a third party (including user’s heirs).
What are the rights of the user?
The main right of the user is to use the property in accordance with its purpose This right prevails over the rights of the owner. The owner cannot arbitrarily “evict” the user from the property, nor use the property while the right of use is in force.
The user can rent the property and receive the rental income.
IMPORTANT! The user cannot carry out any dispositive transactions with the property – sales, donations, exchanges, etc. The user cannot establish mortgages over the property.
IMPORTANT! Considering the personal nature of the right of use, the user cannot transfer it in favor of a third party, i.e. the person “B”, in whose favor the right of use over the property “X” has been established, cannot at his own discretion transfer this right to the person “C”.
What are the obligations of the user?
First of all, the user is obliged to use the property in accordance with its purpose and to maintain it in good condition.
Unless there are express agreements with the owner to the contrary, the user must also:
– pay the costs for using the property – electricity, water, gas, heating;
– pay the local tax and the household waste charge of the property;
– insure the property for the owner.
How does a right of use differ from a lease?
A right of use differs substantially from a lease. As mentioned above, the establishment of a right of use over real estate is a strictly formal transaction, which is concluded only in the form of a notary deed. The lease is an informal agreement whereby a third party obtains a contractual right to use a property temporarily and in exchange of paying a rent.
The owner may unilaterally terminate the tenant’s contract and move to live in his property at any time and entirely at his discretion. This could not happen in the presence of an established right of use.
Under a lease contract, a periodic rent price is always due. As mentioned above, the right of use can be (and most often is) gratuitous.
IMPORTANT! Where there is a valid right of use over a property, it is the user, not the owner, who is legally entitled to enter into a lease, as mentioned above. A lease agreement can be concluded by a user for a maximum period of 3 years.
How is the right of use of a real estate terminated?
If the right of use is established for a certain period of time, it is automatically terminated with the expiration of this term.
If the right of use is indefinite, it terminates with the death of the user.
The right of use is automatically terminated in case of destruction of the property – for example, if a right of use has been established over a house but the house collapses in an earthquake.
The user can renounce from the right of use by himself. This can be done through a notarized declaration, which must be inscribed in the Real Estate Register.
In certain legal situations, the owner of real estate can file a lawsuit in court to terminate the right of use.
In case you need a consultation in connection with forthcoming establishment of a right of use over real estate, atty. Dilyan Kolev can provide you the necessary legal and factual assistance.