When the seller reserves a right of residence or a usufruct: the difference between the two rights, registration as a servitude, the ranking and the effect on the purchase price.
BRANDAUER Rechtsanwälte
Salzburg law firm for real estate, property and corporate law
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When selling a house or apartment the seller sometimes wants to keep living there or to continue using the property. A right of residence or a usufruct is then reserved. For the buyer this is a key point, because they acquire a property that remains encumbered with the seller’s right.
This post explains the difference between a right of residence and a usufruct, why both belong in the land register as a servitude and which points on scope, duration, costs and ranking should be governed. It does not replace a review of the individual case.
From a lawyer’s perspective clean drafting decides between later peace and dispute. Anyone who clearly governs the reach, cost allocation and ranking of the right and has it registered avoids conflicts. And the buyer should take account of the reduction in value through the reserved right in the price.
Answer one or two questions on the reserved right. You will receive a first classification of what to watch for in drafting and registration.
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The right of residence allows living in the property, usufruct also allows use and letting. Both burden the property as a servitude.
If the seller reserves neither a right of residence nor a usufruct, the property is handed over free of such rights of use. Even so, make sure no existing servitude for third parties is registered in the land register that reduces value. A look at the land register extract provides clarity.
How to identify and classify entries in the land register is shown in the post on reading the land register extract.
As long as the right is only discussed verbally, the legal basis is missing. A right of residence or usufruct as a servitude arises against every owner only with registration in the land register. Have the arrangement set out in writing, with scope, duration and cost allocation, and anchored in the contract.
Without a clear rule a dispute over the reach and costs of the right looms later. Booking an initial consultation (72 euro) helps with the clean drafting.
If the seller’s right of residence is governed in scope, duration and cost allocation and is provided for registration as a servitude, it is well secured. The right then takes effect against every future owner. Watch the ranking of the registration so that the right does not fall behind later encumbrances.
As a buyer, bear in mind that the right of residence reduces value and usability. This should be reflected in the purchase price. How encumbrances and rights interact in the land register is explored on the hub page on land register and encumbrances.
If a rule on scope, duration and cost allocation is missing, dispute is preprogrammed. Who bears operating costs and maintenance? Does the right apply for life? May the seller take in third parties? Have these points clarified and the right of residence registered as a servitude with a clear ranking.
As a buyer you should also make sure the reduction in value through the right of residence is reflected in the price. Booking an initial consultation (72 euro) helps to draft the clause cleanly.
If the seller’s usufruct is governed in scope, duration and burden allocation and is provided for registration as a servitude, it is secured. Since usufruct also covers letting, clear rules on maintenance and burdens are particularly important. Watch the ranking of the registration.
As a buyer you initially acquire only the encumbered ownership, the use remains with the seller. This significantly reduces value and usability. How rights interact in the land register is explored on the hub page on land register and encumbrances.
With usufruct without a rule, conflicts are foreshadowed because the right reaches further than a right of residence. Who bears maintenance? Who is entitled to rental income? How long does the right last? Have these questions clarified and the usufruct registered as a servitude with a clear ranking.
As a buyer you should be aware that you initially acquire only encumbered ownership. The reduction in value belongs in the price. Booking an initial consultation (72 euro) helps with the drafting.
The right of residence and usufruct are personal servitudes under the ABGB. The right of residence within the meaning of section 521 ABGB gives the right to live in the apartment or house. The beneficiary may live there, as a rule with their family, but in principle may not let the object.
Usufruct under sections 504 ff ABGB goes further. It gives the right to fully use someone else’s thing and draw its fruits, which includes letting together with rental income. In return the usufructuary is regularly under the duty to maintain the thing within the scope of orderly management.
For the buyer both mean they do not receive full use. With a right of residence the living stays with the seller, with usufruct even the entire economic use. The precise delimitation and scope should be clearly described in the contract. A first orientation is given by our encumbrances and land register check.
For the reserved right to take effect against every future owner, it must be registered as a servitude in the land register. A merely verbal or contractual arrangement without registration binds only the contracting parties and can be lost on a resale. Only registration makes the right a right in rem.
The ranking plays a central role. If the right is registered before a mortgage lien of the financing bank, it remains in place even in the event of a realisation. If it is registered with a lower ranking, it can lapse in a forced sale. Buyer and seller should therefore deliberately shape the ranking.
Registration requires a corresponding declaration and the declaration of consent to registration. How title and rights enter the land register is shown in the post on the declaration of consent and registration.
These points decide whether the right is clearly governed and the price reflects the burden.
| Point | Recommended | Possible risk |
|---|---|---|
| Type of right Clearly named | Right of residence or usufruct clearly designated | Unclear designation leads to dispute |
| Scope Precisely described | Rooms, use and limits defined | Open scope invites conflicts |
| Costs Allocated | Operation and maintenance clearly distributed | Dispute over operating costs and maintenance |
| Registration In the land register | Registered as a servitude | Without registration at risk on a resale |
| Ranking Deliberately chosen | Secured ahead of burdening mortgage liens | Lower ranking endangers the right on realisation |
The legal classification of a right of residence and usufruct follows the ABGB. Scope and effect in the individual case depend on the specific drafting.
Caution with the purchase price: A reserved right of residence or a usufruct considerably reduces the value and usability of the property. Ensure the purchase price reflects this burden and that the right is clearly governed and registered. Booking an initial consultation (72 euro) can quickly provide clarity here.
In the purchase contract the reserved right should be described precisely: which rooms or which use are covered, how long the right applies, whether it exists for life and who bears the costs of operation and maintenance. The more precise the rule, the lower the risk of dispute between buyer and seller.
A rule for the case where the beneficiary no longer exercises the right is also sensible, for instance on a move to a care facility. Here a buyout or a lapse can be provided for. Such clauses prevent the property from remaining permanently encumbered even though the right is in fact no longer used.
Finally the price should reflect the burden. A property with a reserved right is worth less than one free of encumbrances. How existing encumbrances can be discharged or secured is explored in the post on the discharge of encumbrances in the contract.
The right of residence under section 521 ABGB gives the right to live in an apartment or house, as a rule without letting. Usufruct under sections 504 ff ABGB goes further and allows full use including letting and rental income, combined with the duty to maintain. Both are personal servitudes.
For the right to take effect against every future owner, it should be registered as a servitude in the land register. A merely contractual arrangement without registration binds only the parties and can be lost on a resale. The ranking of the registration is also important.
A reserved right of residence or a usufruct reduces the value and usability of the property, because the buyer initially acquires only encumbered ownership. This reduction in value should be reflected in the price. The extent and duration of the right play a role here.
The hub page on how rights and encumbrances interact in the land register.
How to identify and classify entries in the land register.
How title and rights enter the land register and which ranking applies.
How existing encumbrances can be discharged or secured.
When buying property, the contract and the land register decide. Call us directly or send an email, callback within one business day.
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