Building works and renovations on a usufruct property: who decides and who pays

Key concepts: usufructuary and bare owner

To analyse decision-making and the payment for building works on a usufruct property, it is essential to understand the division of rights that applies to the property:

• The usufructuary: This is the person holding the right in rem of use and enjoyment of the property. They may inhabit the property or let it out and collect the fruits (rental income), but they do not hold legal title nor can they freely dispose of it to sell or encumber it. Furthermore, they have a legal obligation to preserve the property in accordance with the traditional principle of respecting its form and substance (salva rerum substantia).
• The bare owner: This is the legal owner of the property, but lacks the right of possession and enjoyment for as long as the usufruct remains in force. Full ownership will be consolidated when this temporary or life-long right is extinguished.

Since both hold simultaneous rights over the same asset, the law allocates both decision-making authority and financial responsibility according to the nature of the works.

Classification of building works on a usufruct property and allocation of costs

Property interventions are legally divided into three main categories: ordinary, extraordinary, and improvement works. The allocation of expense and decision-making power varies significantly among them.

1. Ordinary or routine maintenance repairs

Ordinary repairs are considered to be those interventions necessary to remedy deterioration or damage arising from the regular use of the property and the passage of time, with the objective of keeping the property in suitable living conditions.

• Who decides: The initiative rests with the usufructuary, as they occupy or exploit the property and identify day-to-day maintenance needs.
• Who pays: In accordance with Article 500 of the Civil Code, the usufructuary is required to cover the costs of ordinary repairs in full.

Common examples include fixing a minor fault in taps or the boiler, replacing a faulty electrical mechanism, painting interior walls worn by normal use, or repairing a window blind. If the usufructuary fails to carry out these essential repairs despite their being required for the conservation of the asset, the bare owner may carry them out at the usufructuary's expense after formal notice.

2. Extraordinary or major conservation repairs

Extraordinary works comprise large-scale interventions indispensably required to guarantee the safety, stability, or health conditions of the property, which do not result from a lack of routine maintenance by the usufructuary.

• Who decides: The authority to decide on extraordinary works rests with the bare owner, or they may be mandated by administrative orders from the Building Technical Inspection (ITE) or by decisions of the homeowners' association.
• Who pays: Article 501 of the Civil Code determines that the cost of extraordinary repairs is borne by the bare owner.

Typical examples include structural rehabilitation of pillars or beams, complete roof replacement due to severe leaks, replacing communal downpipes, or resolving rising damp in foundations.

The usufructuary has a legal obligation to notify the bare owner of the urgent need for these works when the property requires them. If the bare owner fails to carry them out when they are essential for the property's survival, the usufructuary may execute them at their own expense, retaining the right to claim the increase in value or reimbursement of costs upon termination of the usufruct. If the bare owner undertakes them during the term of the usufruct, they have the right to demand that the usufructuary pay legal interest on the amount invested for as long as the enjoyment continues.

3. Improvement or voluntary works

Improvement or voluntary works are non-essential modifications for conservation aimed at increasing comfort, aesthetics, functionality, or energy efficiency without an immediate urgency.

• Who decides: The usufructuary has the power to make useful or recreational improvements to the home, provided they do not alter the form, substance, or structure of the property, as established in Article 487 of the Civil Code.
• Who pays: The total cost of the improvement must be borne by the person who decides to undertake it, usually the usufructuary.

Upon termination of the usufruct, the usufructuary (or their heirs) will not be entitled to any financial compensation for the improvements introduced. However, they retain the right to remove them if this can be done without causing detriment to the property. Likewise, if the works have caused any damage, the value of the improvements made may set off against the estimated cost of such damage.

Planning permissions, structural alterations, and the homeowners' association

In the context of building works on a usufruct property, the powers of the parties are further defined by the Horizontal Property Act and local planning regulations.

No usufructuary may carry out renovations that alter structural elements, the external configuration of the facade, or load-bearing walls without the express written consent of the bare owner. In the event of substantial alterations made without prior authorisation, the bare owner may legally demand the immediate suspension of the works and the restoration of the property to its original condition at the usufructuary's expense.

Within homeowners' associations, the formal representative before the AGM is the bare owner. However, in daily practice, attendance is often delegated to the usufructuary for routine management matters. If the community approves works or special levies, the allocation of payment will follow the stated legal principles:

• Ordinary community fees and minor communal repairs: Payable by the usufructuary.
• Extraordinary special levies relating to the structure or conservation of the building: Must be paid by the bare owner as capital, although they may claim legal interest from the usufructuary for the remaining duration of the usufruct.

Conflict prevention in estate management

The correct definition of responsibility regarding building works on a usufruct property becomes critically important when the creation of the right forms part of financial planning strategies, such as bare ownership sales. This arrangement enables senior citizens to transfer ownership of their home while securing lifetime use and enjoyment, remaining in their primary residence, and releasing equity.

To ensure a harmonious arrangement and prevent future disputes between new owners/investors and life usufructuaries, contracts should include detailed clauses clearly specifying the exact distribution of special levies, property taxes (such as IBI), and guidelines for agreeing adaptation reforms.

At Sky Real Estate, we benefit from specialized legal advisory services, recognized through the work of Sky Law at the European Legal Awards 2023-2025, and the solid standing of our regulated status as a real estate credit intermediary registered with the Banco de España (ICI code D-286). We design every agreement to ensure complete legal transparency, protecting the peace of mind and rights of both usufructuaries and owners.

If you would like to explore the legal and financial aspects of this type of ownership in greater detail, or are evaluating options to make the most of your property assets while retaining the use of your home, you can find full details on our specialist service for bare ownership sales.