I. About This Article
Usufruct in Georgia is one of the important real rights connected with real estate. In practice, it becomes especially relevant when an owner wants to retain ownership of property but grant another person broad use of that property.
Such a need may arise in family relationships, business transactions, property management, transfer of real estate, investment arrangements or other cases where the owner wants to give a specific person a guaranteed right to use property without transferring ownership.
Usufruct is not rental, lease or gratuitous lending for use. It is a stronger legal mechanism because, once registered in the Public Registry, it is recorded as a real right over real estate and affects both the owner and any subsequent buyer.
For this reason, before purchasing, transferring or encumbering real estate, it is necessary to check whether usufruct is registered over the property, for what period it has been established, who the usufructuary is, whether the right is paid or unpaid, and what restrictions it creates for the owner or buyer. For more information about property checks, see our legal blog: Legal Due Diligence of Real Estate – What Should a Buyer Check Before Purchase?
This article explains what usufruct in Georgia means, how it is established, what rights the usufructuary has, what obligations remain with the owner, and why prior legal assessment of this right is necessary in real estate transactions.
II. What Is Usufruct?
Under the Civil Code of Georgia, usufruct is a right based on which immovable property may be transferred to another person for use in such a way that this person is entitled to use the property as an owner would and prevent third parties from using it. However, unlike the owner, the usufructuary does not have the right to alienate the property, encumber it with a mortgage or transfer it by inheritance.
This means that usufruct gives the usufructuary broad use of property but does not make them the owner. Ownership remains with the owner, while the usufructuary receives the right to use, possess and receive benefits from the property.
For example, if a person has usufruct in Georgia over real estate, they may live in the property, use it, receive benefit from it and, in certain cases, rent or lease it to another person with the owner’s consent. However, they cannot sell the property, mortgage it or transfer it by inheritance.
Therefore, usufruct in Georgia is a practical balance between the interests of the owner and the user. On the one hand, the owner retains ownership; on the other hand, the usufructuary receives a real, registered and protected right of use.
III. How Does Usufruct in Georgia Differ from Ownership?
Ownership over real estate is the broadest real right. The owner has the right to possess, use and dispose of the property. The owner may sell the property, gift it, encumber it with a mortgage, transfer it by inheritance or otherwise dispose of it.
Usufruct in Georgia grants only part of these rights to the usufructuary. The usufructuary has the right to use and possess the property, but does not have the right to dispose of it. The absence of the right of disposal is the main difference between ownership and usufruct.
In practical terms, this means that the usufructuary may use the property almost as an owner would, but still does not become the owner. The usufructuary cannot sell the property or perform a legal act that changes the ownership right.
Court practice also emphasizes that the usufructuary, as a lawful possessor, may be equated with the owner when exercising possession over the property. However, this does not mean full transfer of ownership. The usufructuary has a strong right of use, but the main core of ownership – disposal – remains with the owner.
Accordingly, if usufruct in Georgia is registered over property, a buyer should understand that acquiring ownership may not mean immediate free use of the property. The new owner may become the owner of property that another person lawfully possesses and uses.
IV. How Does Usufruct in Georgia Differ from Rental and Lease?
In practice, usufruct in Georgia rental and lease are often confused. In all three cases, one person uses another person’s property, but the legal consequences are different.
Rental and lease are generally obligation-based relationships. They arise from a contract between the parties and mostly operate between the participants of that contract. Registration of rental or lease in the Public Registry may have separate importance, but their legal nature is still different from a real right.
Usufruct in Georgia , however, is a real right. It is registered over real estate and may follow the property to a subsequent owner. This means that sale of the property does not automatically terminate usufruct, unless it is terminated by law or by a specific legal basis.
It is particularly important that renting or leasing property encumbered with usufruct in Georgia requires the owner’s consent. Therefore, although the usufructuary has a broad right of use, the need for the owner’s consent remains when transferring the property for use to a third party.
Failure to consider this difference creates serious practical problems. For example, a buyer may purchase property expecting to use it freely, but later discover that usufruct in Georgia is registered over the property and gives the usufructuary a better right to possess and use it.
For more information about this issue, see our blog: Lease Agreement.
For more information about registration of lease, see our blog: Registration of Lease in the Public Registry.
V. Over What Property May Usufruct in Georgia Be Established?
Usufruct in Georgia may be established over immovable property. According to the commentary to the Civil Code, Georgian law, unlike German law, does not recognise a general possibility of establishing usufruct in Georgia over movable property. In practice, usufruct concerns a land plot, apartment, building or rights equivalent to real estate.
In relation to real estate, usufruct in Georgia may be established over a land plot, residential apartment, commercial space, house, real estate connected with a right similar to development rights, or a share or certain part of immovable property if this is legally structured correctly.
It is important that the subject of usufruct in Georgia be precisely identified. If the right concerns a land plot, the cadastral code, area and registration data must be identified. If it concerns an apartment or commercial space, its registration as an independent object of rights must be checked.
The Law of Georgia on Public Registry directly provides that usufructin Georgia is registered in the register of rights to immovable property as one of the real rights. Therefore, if the parties want this right to be protected against third parties, signing a contract alone is not enough – registration in the Public Registry is required.
Accordingly, usufruct in Georgia should always be viewed not only from the contractual perspective, but also from the registration perspective.
VI. How Is Usufruct Established?
Usufruct is established according to the rules that apply to the acquisition of rights over immovable property. In practice, this means an agreement between the parties and registration in the Public Registry.
According to the commentary to the Civil Code, two principles are important for acquiring usufruct by transaction: substantive legal agreement and the publicity principle. For the right to arise, an agreement is needed between the person whose legal position is restricted and the person who acquires the right of use. After that, registration in the Public Registry is required.
In practical terms, this means that there should be a written agreement between the owner and the usufructuary, clearly defining who the owner is, who the usufructuary is, over which property usufruct is established, whether it is paid, for what period it is established, what the purpose of use is, whether the usufructuary may transfer the property to a third party for use, who bears current expenses, who insures the property, what happens in case of damage to the property and how the right is terminated.
If these issues are vague, disputes may later arise between the owner and the usufructuary, as well as with third parties, including a buyer, heir or mortgage creditor.
VII. Registration of Usufruct in the Public Registry
Usufruct over real estate gains particular practical importance after registration in the Public Registry. Without registration, the parties’ agreement may remain only an obligation-based relationship and may not fully create the legal effect against third parties that is characteristic of a real right.
Under the Law on Public Registry, ownership, development right, usufruct, easement, mortgage, rental, lease and other rights are registered in the register of rights to immovable property. The same system reflects identifying data of the subject and object of the right, including cadastral data.
For a buyer, this means that before purchasing real estate, it is necessary to check the Public Registry extract and determine whether the property is encumbered with usufruct. If usufruct is registered, it may directly restrict the buyer’s ability to use the property immediately.
The Public Registry record has special importance because registered data is presumed to be accurate until it is cancelled, declared invalid or declared null under the procedure established by law. Therefore, checking registered rights before a real estate transaction is an essential part of protecting the buyer.
For more information about a similar real right, see our blog: Easement.
VIII. Usufruct When Buying Real Estate – What Should the Buyer Pay Attention To?
When buying real estate, the buyer, with the assistance of a Real Estate Lawyer, should check whether usufruct is registered over the property. This is especially important when the property is sold at auction, during realization of mortgaged property, in family disputes, inherited property or transactions where another person actually uses the property.
If the buyer purchases property encumbered with usufruct, the buyer may become the owner but may not be able to use the property freely until the usufruct is terminated. This is especially problematic where the buyer needs the property for residence, rental, commercial activity or development purposes.
In one case of the Supreme Court of Georgia, the claimant purchased real estate at a compulsory auction that was encumbered with gratuitous usufruct for a period of ten years. The court explained that, when ownership was transferred to the claimant, the property continued to be encumbered with the real right – usufruct. Therefore, the new owner became the bearer of the legal burden that the previous owner had in relation to the property.
In the same case, the court did not accept the argument that the change of owner should be assessed as changed circumstances and that usufruct could be cancelled on that basis. According to the court, the new owner was informed about the existing legal encumbrance over the property and this burden belonged to their sphere of risk.
This practical example shows that usufruct is not a formal entry when buying real estate. It actually determines whether the buyer will be able to use the property.
IX. Rights of the Usufructuary
Usufruct grants broad rights to the usufructuary. The usufructuary may possess the property, use it, receive benefit from it and protect their possession against third parties.
The main rights of the usufructuary include using the property, possessing the property, receiving fruits and benefits from the property, preventing third parties from using it, protecting possession and, in some cases, renting or leasing the property with the owner’s consent.
According to the commentary to the Civil Code, after usufruct is established, a legal obligation relationship also arises between the owner and the usufructuary. The usufructuary has the right to receive any benefit from the property, use the property or receive benefit by allowing a third party to use the property, although in case of rental or lease, the owner’s consent is required.
This means that usufruct is not only passive use. It gives the usufructuary an active legal position. The usufructuary may use the property, receive fruits and protect their right.
For example, if usufruct is established over agricultural land, the usufructuary may be entitled to fruits received from the land. If the right is established over a residential apartment, the usufructuary may live in the apartment and may even prevent the owner from using it if such use contradicts the content of usufruct.
X. What Can the Usufructuary Not Do?
Despite the broad right of use, usufruct does not give the usufructuary full ownership powers. The usufructuary cannot dispose of the property.
The usufructuary does not have the right to sell the property, gift the property, encumber the property with a mortgage, transfer usufruct by inheritance, change the purpose of use without the owner’s consent, rent or lease the property without the owner’s consent, damage the property or change its economic purpose.
The commentary to the Civil Code emphasizes that usufruct is a personal right. For this reason, it cannot be freely transferred to another person in the same way as ownership. If the parties want to involve a third party or rent/lease the property, this issue should be regulated in advance in the agreement and, where necessary, carried out with the owner’s consent.
Therefore, usufruct necessarily requires a precisely drafted agreement. Otherwise, a dispute may arise between the parties over where the boundary lies between use and disposal.
XI. Obligations of the Usufructuary
Usufruct is not only a right. It also imposes certain obligations on the usufructuary. These obligations are connected with preservation of the property, use of the property according to its purpose and protection of the owner’s interests.
According to the commentary to the Civil Code, the usufructuary is obliged to preserve the substance and economic purpose of the property. The usufructuary is not liable for normal wear and tear, but is obliged to bear current expenses, carry out current repairs and take care of the normal economic maintenance of the property.
In practical terms, if the usufructuary uses an apartment, house or land plot, they should not change the main purpose of the property without the owner’s consent. They should maintain the condition of the property within the limits corresponding to ordinary use.
If the property is damaged, destroyed or unforeseen expenses arise, the usufructuary must immediately notify the owner. If the owner carries out necessary measures to protect the property or prevent damage, the usufructuary must tolerate such actions.
Insurance is also important. If the law or the parties’ agreement provides for it, the usufructuary is obliged to insure the property. This is especially relevant in the case of commercial property, high-value buildings or special-purpose assets.
For this reason, usufruct should be planned not only from the perspective of granting the right, but also from the perspective of maintenance, expenses, repairs, insurance and allocation of damage-related risks.
XII. Paid and Unpaid Usufruct
Usufruct may be paid or unpaid. Unpaid usufruct is often used in family or close personal relationships, where the owner grants a specific person the right to use property without payment.
Paid usufruct may be used in business transactions, investment relationships or cases where the owner grants the right to use property in exchange for certain remuneration.
The issue of payment should be regulated especially carefully in the agreement. The parties should define the amount of payment, payment frequency, consequences of non-payment, who covers utilities and other current expenses, who pays insurance or repair costs, and whether usufruct may be terminated in case of payment breach.
If these terms are vague, a question may later arise whether non-payment is only an obligation-based breach or whether it affects the existence of the real right itself. To avoid such risks, a paid usufruct agreement should be prepared with particular precision.
XIII. Term and Termination of Usufruct
Usufruct may exist temporarily or for the lifetime of the usufructuary. If the usufructuary is an individual, the right terminates upon their death. If the usufructuary is a legal entity, the right terminates upon its liquidation.
This rule once again shows the personal nature of usufruct. Usufruct is not a right that normally transfers to heirs. On the contrary, it is connected with a specific person and its existence is limited by that person’s life or by the existence of the legal entity.
Usufruct may also terminate upon expiry of the term, occurrence of a cancellation condition, agreement of the parties, death of the usufructuary, liquidation of the legal entity, consolidation when ownership and usufruct come into the hands of the same person, or another ground provided by law.
After usufruct ends, the usufructuary is obliged to return the property to the owner. If the property has deteriorated due to the usufructuary’s fault beyond normal wear and tear, the issue of compensation for damage may also arise.
In addition, after termination of usufruct, the relevant entry must be cancelled in the Public Registry. If usufruct remains registered, it may practically obstruct the sale of the property, its mortgage or another legal action.
XIV. Usufruct and the New Owner
For a buyer of real estate, one of the most important questions is what happens when the property is already encumbered with usufruct and is later sold.
The general practical conclusion is this: if usufruct is lawfully registered and there is no ground for its termination, a change of owner does not automatically cancel the right.
Court practice shows that a buyer who acquires a property with a legal encumbrance replaces the previous owner and becomes a participant in the legal relationship connected with that property. If property is acquired while encumbered with usufruct, the new owner also accepts this burden.
This is especially important when purchasing property at auction. A buyer may expect that acquiring property at auction solves all problems. However, if a previously registered real right remains unchanged, the buyer is obliged to take that burden into account.
Therefore, in legal due diligence of real estate, usufruct should be assessed as one of the most important legal encumbrances. Its existence directly affects the property price, use, income generation and subsequent disposal.
XV. When Can Usufruct Be Cancelled?
Usufruct is not cancelled only because the owner no longer wants it to exist. If the right is lawfully established and registered, a relevant legal basis is required for its cancellation.
Cancellation may occur if the specified term has expired, a contractual cancellation condition has occurred, the usufructuary has died, the legal entity usufructuary has been liquidated, the parties agree on cancellation, ownership and usufruct are united in one person, or there is a court decision or another legal basis.
However, change of owner alone is generally not sufficient to cancel usufruct. In the practice of the Supreme Court, this issue arose when a new owner tried to cancel usufruct on the basis of changed circumstances. The court indicated that the new owner was informed about the legal encumbrance existing over the property and this risk belonged to the buyer’s sphere of control.
This practical conclusion is important for all buyers: if usufruct is registered over property, the possibility of cancelling it should be assessed in advance, not only after completion of the transaction.
XVI. Usufruct and Vindicatory Claim
The owner of property may have a claim to recover property from unlawful possession. However, if the defendant possesses the property on the basis of usufruct, their possession cannot be considered unlawful only because the owner wants the property returned.
In the practice of the Supreme Court of Georgia, it has been noted that for a vindicatory claim to be satisfied, it must be determined whether the current possessors have a better right to possess the property than the claimant. If such a right exists, the owner’s claim for recovery of the property may not be satisfied.
Therefore, in practice, usufruct may become an important defence against the owner’s vindicatory claim. If the usufructuary has a lawfully established and valid right, they possess the property not unlawfully, but on a legal basis.
This is especially important in real estate disputes where one party has ownership and the other party has a right of use or possession. In such cases, the court assesses not only ownership, but also the legal basis of possession.
XVII. What Should Be Checked in a Usufruct Agreement?
If the parties intend to establish usufruct, or if a buyer is purchasing property encumbered with usufruct, the agreement and the Public Registry entry should be reviewed in detail.
In particular, the following should be checked: who the owner is, who the usufructuary is, exactly over which property usufruct is established, whether the property is correctly identified by cadastral code, for what term the right is established, whether the right is paid, what the purpose of use is, whether the usufructuary has the right to rent or lease the property, what expenses are borne by the usufructuary, who is responsible for current repairs, whether there is an insurance obligation, what happens in case of damage to the property, under what conditions the right may be terminated and whether the right is registered in the Public Registry.
Without considering these issues, usufruct may become a source of a long-term dispute. This is especially true where the property is high-value, has commercial purpose or is intended to generate income.
XVIII. When Is Usufruct Useful in Practice?
Usufruct may be a useful mechanism in different practical situations.
In family relationships, an owner may transfer property into a child’s ownership but retain usufruct for themselves or another family member in order to secure the right to use the property during their lifetime.
In business transactions, usufruct may be used where ownership remains with one person, but another person receives a long-term, registered and protected right to use the property.
In property management, usufruct may also be used where the owner does not want to sell property but wants to give a specific person the opportunity to use it economically.
In all these cases, legal precision is necessary. Usufruct is a strong instrument, but an incorrectly drafted agreement or an incompletely assessed registry entry may create serious problems in the future.
XIX. How TB Legal Can Help
Our Law Firm in Georgia offers legal support in matters related to usufruct, real estate registration, legal due diligence of property and real estate disputes.
Our assistance may include preparation of a usufruct agreement, legal review of an existing agreement, assessment of usufruct registration issues in the Public Registry, legal due diligence before purchasing property encumbered with usufruct, analysis of the rights and obligations of the owner and usufructuary, assessment of the possibility of cancelling usufruct, analysis of legal encumbrances over property, representation in court disputes and preparation of a legal strategy for a real estate transaction.
Usufruct should be checked especially carefully when property is sold, transferred, encumbered, used as mortgage security for an obligation or used for business or investment purposes.
For additional information about real estate-related legal support, see our service page: Legal Support for Real Estate Registration in Georgia – Property Rights, Public Registry and Legal Protection.
XX. Conclusion
Usufruct is a broad real right of use over real estate, which gives the usufructuary the ability to use, possess and receive fruits from the property, but does not give the right to dispose of the property. It differs from rental and lease because, when registered, it is recorded as a real right over real estate and may affect a subsequent owner.
For a buyer of real estate, usufruct is one of the most important legal encumbrances to check. If property is encumbered with usufruct, the buyer may acquire ownership but may not be able to fully use the property until this right is terminated.
For the owner, usufruct is a mechanism through which it is possible to transfer the right to use property while retaining ownership. However, in such case, the agreement must precisely define the term, purpose of use, expenses, repairs, insurance, possibility of transfer to third parties and grounds for termination.
A correctly drafted and registered usufruct may be an effective legal instrument, while an improperly drafted or unverified usufruct may become the basis for a long-term dispute and restriction on the use of real estate.
XXI. Sources Used
- Commentary to the Civil Code of Georgia, Book II, Articles 242–246.
- Supreme Court of Georgia, case No. AS-385-2021, 21 December 2022.
- Supreme Court of Georgia, case No. AS-478-446-2017, 22 December 2017.
- Law of Georgia on Public Registry.
- Instruction on Public Registry approved by the order of the Minister of Justice of Georgia.
Disclaimer
This article has been prepared for general informational and analytical purposes only and does not constitute individual legal advice, a legal opinion or a recommendation for action in a specific case. The issues discussed in this article are based on the general legal regulation of usufruct in Georgia , commentary to the Civil Code, Public Registry regulations and analysis of court practice.
Before purchasing real estate, establishing usufruct, registering usufruct or requesting its cancellation, it is necessary to individually assess the specific registry extract, agreement, registration documentation, legal encumbrances over the property, status of the parties and factual circumstances. Only after such detailed analysis is it possible to determine specific legal risks, protection mechanisms and a further action strategy.
