The term ‘usufruct’ may sound complex, but in Costa Rica it is a simple and powerful legal figure that allows you to transfer a property while retaining the right to use and enjoy it for life. It is a commonly used tool for estate planning, family protection, and even tax efficiency.
What is usufruct and how does it work?
Usufruct is a right established in the Costa Rican Civil Code (Art. 279 et seq.) that allows a person (usufructuary) to use, inhabit, or lease a property without being its legal owner.
Usually, it is used in combination with what is known as ‘bare ownership’. That is, the full ownership of the property is divided into two parts: usufruct (use and enjoyment) and bare ownership (title of ownership).
Usufruct vs. Bare ownership: what’s the difference?
– Usufructuary: Has the right to use the property, rent it, and live in it. However, they cannot sell it.
– Bare owner: Is the legal owner of the property but cannot use or lease it while the usufruct exists.
Upon the death of the usufructuary, the bare owner automatically regains full ownership without the need for probate or succession proceedings.
Benefits of usufruct in estate planning
– Protect a loved one: For example, a person can transfer a property to a child or spouse while retaining the right to live in it for life.
– Avoid probate: When the usufruct ends, full ownership returns to the bare owner directly, avoiding lengthy and costly succession proceedings.
– Save on taxes: Since the transfer does not constitute a full sale, it can reduce capital gains or inheritance-related taxation.
Can the usufruct be sold or modified?
No. Usufruct is a non-transferable and non-sellable right. The usufructuary cannot sell the property or modify its legal status.
It is also important to note that the bare owner cannot dispose of the property without the consent of the usufructuary while the usufruct is in effect.
When does usufruct end?
The most common causes are:
– The death of the usufructuary (if it was granted for life)
– The expiration of a set term (if it was limited in time)
– Agreement between the parties to cancel it in advance
– Legal causes, such as destruction of the property
Why seek legal advice?
Although usufruct is a valuable planning tool, it must be drafted correctly and registered with the National Registry of Costa Rica to have legal effect. At ERP Lawyers & Associates we can help you:
– Draft and notarize a usufruct agreement
– Register the usufruct and bare ownership properly
– Assess tax and succession implications
📩 Contact us to explore the best way to protect your estate and those you love.
