Usufruct under Mexican Property Law
Antonio Maldonado
Usufructo [u.suˈfɾuk.to]
The concept of usufruct originates from Roman law. It was a part of the Roman property law system, which laid the foundation for many modern legal systems around the world, including those in Europe and Latin America. The term "usufruct" itself is derived from the Latin words "usus" and "fructus," which mean "use" and "enjoyment," respectively. Usufruct is still in use in Mexican property law.
Usufruct grants an individual the right to use, enjoy, and profit from someone else's property without actually owning it. Unlike leasing or renting, usufruct is a more permanent arrangement that can last for a lifetime or a defined period. This concept is similar to a “life estate” as known under common law property system, but a life estate is more restrictive to the holder of such rights and it is tied to the lifetime of the individual.
Under Mexican law, usufruct gives the usufruct holder the right to use another person's land or personal property, draw from its natural resources, and even collect rent from tenants. However, you're also responsible for maintaining the property, paying taxes, and ensuring it's not damaged. While a usufruct holder can sell or otherwise transfer their usufruct rights, because they do not own the property subject to the usufruct they cannot sell or mortgage the underlying property. When the usufruct period ends, the property reverts back to the original owner or their heirs.
Usufruct is sometimes used in estate planning in Mexico when a Mexico-resident grantor wants to make a tax-free gift to a Mexico-resident child or grandchild but retain the right to possess, use and collect rents from the property during the grantor’s lifetime. A usufruct is usually formalized before a Mexican notary public through a notarial public deed.
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Copyright 2023 by Antonio Maldonado, Maldonado Myers LLP