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  • Writer's pictureCristina Barragán Silva | L.D

Bare ownership and usufruct: What is the difference?

Although Mexican law does not mention ” bare ownership” as such, it is necessary to resort to doctrines, jurisprudential criteria and thesis that helps to clarify this concept. Its definition can be obtained after the interpretation of several articles included in the Civil Codes of the States, as well as in the Federal Code.

For a better understanding of this concept, it is necessary to remember that in Mexico the right to property is recognized in the Political Constitution of the United Mexican States in Article 27, which is divided into three types: public (the nation reserves the original ownership of water and land); private (the nation transfers the ownership of land and water to private individuals) and social (the nation transfers the ownership of land and water to the ejidos and agrarian communities).

Therefore, the term property is defined as “…the real right that grants its holder the power to use (the power to occupy and use a property for its own purposes), enjoy (the power to own the fruits generated by the thing) and dispose (the power to transfer the rights granted by the quality of owner) of a property with no other limitations than those established by law”.

Therefore, the concept of private property is nothing more than the right or faculty to own something and to be able to dispose of it within legal limits, and it is precisely in “private property” where both usufruct and bare ownership coexist.

It is also important to point out that this concept of “bare ownership” invariably goes hand in hand with the term “usufruct” which is defined as the real and temporary right to enjoy the property of others. Therefore, for defining terms, it could be mentioned that the bare ownership consists of the ownership of a good, but it does not necessarily imply its possession and enjoyment, which depend on who has the usufruct of the same.

As an example, we could mention Article 2900 of the Federal Civil Code, where it is mentioned that “The bare property may be mortgaged, in which case if the usufruct is consolidated with it in the person of the owner, the mortgage will be extended to the same usufruct if so agreed”.

Therefore, when speaking of bare ownership and usufruct, it could be mentioned that it is the dismemberment of the previously mentioned faculties where the usufructuary has the rights of use and enjoyment of a property of which it is not the owner, and the bare owner has the ownership of the property without the power of use while the usufruct exists. Therefore, once the usufruct is extinguished, the party having the bare ownership will have full dominion over the property.

With respect to its duration, it is important to mention that if no term is established, it will be considered to be for life, due to the premise that sooner or later it will have to be terminated. In practice, this type of contract usually has as its purpose the transfer of ownership, so that for tax purposes it would be subject to income tax (ISR) and real estate acquisition tax, as the case may be.

Some advisors recommend entering into this type of contracts so that the assets are transferred free of charge to the name of children or grandchildren but keeping the use of the assets. Therefore, great care must be taken at the moment of celebrating this type of acts, since the Tax Administration Service (SAT) pays special attention to this type of operations because they turn out to be – in some cases – strategies to evade tax responsibilities.

In conclusion, it is of vital importance to have specialized tax and legal advice to help in the viable setup of this type of legal acts as best suits the interests of individuals. In Consultores Rojas, Terán y Asociados; we are at the best disposition to solve any doubt in relation to patrimonial and real estate law.


Published on December 8th, 2021.

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