Real estate expert Sergio Gutiérrez has warned property buyers in Madrid against purchasing homes through bare ownership deals, cautioning that properties advertised on public portals have typically been rejected by professional investors.
Gutiérrez, a social media content creator who operates under the account @sergio_excellence_circle, analyzed the hidden legal and financial risks associated with the transaction model.
Bare ownership allows a buyer to purchase a residential property at a reduced price while granting another person the right to live in the home through a legal arrangement known as a usufruct. The arrangement is commonly used by retired individuals who seek to supplement low pension incomes by converting their home equity into cash.
In property law, bare ownership splits legal rights into two parts: ownership of the physical property structure and usufruct rights, which grant full use and occupation to the resident during their lifetime. Full legal ownership automatically reunites when the usufruct ends upon the resident's death.
Professional Investor Selection
Gutiérrez warned that key drawbacks are often omitted before buyers sign bare ownership contracts. He noted that if a property listed under bare ownership reaches public real estate portals, it indicates that a professional investor has already turned it down.
He emphasized that public real estate portals generally receive properties that other market participants do not want. He urged prospective buyers to exercise strong caution when evaluating advertised commercial opportunities in the housing market.
Significant time uncertainty also surrounds bare ownership purchases. Gutiérrez pointed out that buyers often face waiting periods of ten to twenty years before the usufructuary passes away and full possession transfers to the owner.
During these extended waiting periods, physical properties naturally deteriorate over time. Gutiérrez explained that wear and tear forces buyers to pay for extensive home renovations upon taking possession, which severely shrinks profit margins and reduces overall financial returns.
Renovation Costs and Occupancy Risks
Gutiérrez also highlighted potential legal conflicts that can arise following the death of a usufruct holder. Investors who arrive to claim their home may discover that a child of the deceased resident is living inside the property.
He warned that such situations instantly transform a standard property acquisition into a legal dispute. Investors risk transitioning from holding bare ownership of a property to owning an apartment illegally occupied by a vulnerable resident, creating major obstacles to recovering the home.
Amid rising residential property prices across the housing market, Gutiérrez recalled the traditional Spanish saying that nobody gives five pesetas for four pesetas, meaning there are no genuine bargains without hidden costs.
He urged potential buyers to carefully evaluate all economic and legal implications before committing to a bare ownership property purchase.
