HOME FORECLOSURE: INTRODUCTION
What happens when the Internal Revenue Service arrives with the goal of foreclosure on your home? It is never an easy or pleasant situation and in this article we will explain what are the dynamics and precautions to take to avoid foreclosure.
The usufruct is basically the right to enjoy an asset, in this case a property, which, however, belongs to another person. It follows that there is a widespread belief that by donating one’s home and becoming its usufructuary, one can escape foreclosure.
However, things are not as simple as they seem. First, because creditors can seek revocation of the deed of gift during the first five years, and second, because the usufruct right itself can also fall victim to foreclosure.
Paradoxically, the debtor’s situation is not only likely to become more complicated, but may even worsen: the value of a usufruct right is in fact lower than that of a property free of encumbrances. As a result, so will the auction proceeds, and the former usufructuary would end up with a higher outstanding debt.
THE RIGHT OF USUFRUCT
The rights of usufruct, use and dwelling are limited real rights, that is, rights that, in direct relation to the property that is the object, coexist with the right of ownership, compress it and deprive it of the essential faculties of enjoyment.
In detail, theusufruct allows the enjoyment of a movable or immovable property, making their own the fruits both natural and civil and with the obligation to respect the economic destination, or rather not to change the character and nature.
SEIZURE OF PROPERTY IN USUFRUCT: WHAT HAPPENS?
The usufruct is a foreclosable right. In practical terms this means that the creditor can put up for judicial auction not the ownership of the property but the possibility of living in it or using it in some other way for the remaining duration of the usufruct itself.
In this way, the successful bidder will be able to occupy a property without having to pay any rent, as is the case with renting. Clearly the only charge will be the purchase price of the usufruct.
IS THE USUFRUCT ATTACHABLE?
Theusufruct is one of the so-called “real rights” that is a right on a “thing”. Of all real rights, the most well-known is property. As such, theusufruct can be a victim of foreclosure. In other words, the creditor can subject the right of usufruct claimed by the debtor to forced execution and put it up for sale at a judicial auction. The rules on foreclosure are the same as for any other real estate foreclosure.
Attention, however: the duration of the usufruct, even after adjudication after attachment, is always that indicated in the contract of assignment of the usufruct itself or, if not specified, is equal to the life of the usufructuary. That is, a usufruct that continues after the death of the original usufructuary is not possible.
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