Selling despite right of residence: What owners should clarify before selling

Selling a house or apartment while allowing someone to continue living there is possible, but requires careful preparation. A lifelong right of residence often arises as part of an anticipated inheritance, when parents transfer the property and secure the right to use it. This right also plays a role in reverse mortgages or family agreements. For sellers, this means that while the property remains marketable, its value, target audience, and contractual terms change significantly.

How the right of residence affects property value

A right of residence registered in the land register reduces the market value because buyers cannot freely use or rent out the property. Appraisers therefore first determine the value of the property without any encumbrance and then deduct the capitalized value of the right of residence. This involves considering what market-rate rent could be achieved for the affected rooms and how long the right is expected to last.

In the case of a lifelong right of residence, the statistical life expectancy of the beneficiary also plays a role. The younger the person with the right of residence and the more extensive the right is defined, the greater the reduction in value. It is important to distinguish this from a usufruct. While a right of residence usually pertains to the owner's own use of the property, a usufruct can extend further and also include rental income.

Which buyers are eligible for properties with a right of residence?

A property with a right of residence doesn't appeal to every buyer. Those who want to move in themselves in the short term or generate rental income immediately are often excluded. However, such a property can be interesting for investors who think long-term, accept a reduced purchase price, and view the property as a potential future use.

Buyers from the family network or investors with experience in specific contractual arrangements are also potential candidates. Transparent marketing is crucial. The right of residence should not be hidden but clearly explained from the outset. This helps create realistic expectations and avoids later questions or uncertainties.

Why the purchase contract must be particularly precise

When selling a property with a right of residence, clear agreements are essential. The purchase contract should explicitly state which rooms may be used, whether common areas can be shared, and who bears ongoing costs, maintenance, and utilities. Equally important is a thorough review of the land register, as it reveals whether the right remains in effect, can be extinguished, and its priority ranking. Buyers need planning security, sellers need legal certainty, and the person with the right of residence must be protected. Therefore, notaries, appraisers, and real estate agents should collaborate closely before a price is communicated or a contract is signed.

Are you looking to sell a property where a right of residence or usufruct is registered in the land register? We will assess the situation, determine a fair market value, and specifically target buyers who understand this unique situation. Contact us for a discreet and expert valuation.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

Photo: © Wordliner/Image created with OpenAI's ChatGPT

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