Swiss property usufruct, the chalet divorce could not undo

A chalet bought so their child would inherit it, a divorce heard in Geneva, and a usufruct the judges wanted struck off the land register in a single line. The Federal Supreme Court refused, and its reasoning reaches every family that passes property on while still alive.

A chalet, a divorce and a usufruct that held

The couple had bought a chalet registered in the wife’s name alone. The deed of sale reserved a life usufruct for the husband, to be exercised jointly with her, with a stated purpose, keeping the chalet for the child they had together. After the separation and then the divorce, the husband asked to be paid for giving the right up.

The Geneva courts first held that the usufruct had lost its purpose, and ordered it struck off with no compensation. The Federal Supreme Court overturned that reading on 22 October 2025, in a ruling marked for publication. Article 736 CC, which releases an easement that has become useless and applies to a usufruct by analogy, demands a complete loss of interest, in the use of the property and in its income alike.

The husband still had a measurable economic interest, letting the chalet or sharing the rent. Only the joint use had gone, not the usufruct itself. The case returns to the Geneva judges, this time to weigh a partial release against compensation (art. 736 para. 2 CC).

How is a usufruct created on Swiss property?

A Swiss property usufruct takes two acts, and neither can be skipped. First a constitutive deed in authenticated form, meaning before a notary, with cantonal law setting the details of that form (Festschrift KSG 2023), then entry in the land register, which brings the right into being rather than merely publishing it (art. 746 para. 1 CC).

Article 745 CC defines a usufruct as the full enjoyment of a thing, its use and its fruits, while someone else stays the owner, and allows it to cover a whole building or a defined part of one, a single floor for instance.

The standard notarial arrangement fits into one signature. The parents give the bare ownership to the children and reserve the usufruct for themselves, entered in the land register as the transfer goes through. A Geneva case file shows the pattern at work, a daughter had received plots from her father, who had reserved the usufruct in a notarised deed of 2005.

Farmland carries one condition more. If the property falls under the rural land act (LDFR), an authorisation is added to the two steps, and without it the constitutive deed has no effect.

What happens when the parent holding the usufruct dies?

Nothing automatic in the land register. A usufruct ends with the total loss of the thing or, on real estate, with the deletion of the entry (art. 748 para. 1 CC), and the death of the usufructuary gives the bare owner no more than the right to demand that deletion (art. 748 para. 2 CC).

The children become registered full owners after an administrative step, not on the day of the funeral. Until that step is taken, the register still shows a charge on the property, and a bank or a buyer will read that charge first.

Who pays for the roof, the parent or the child?

The parent holding the usufruct pays for daily life, the child who owns the property pays for its structure. The usufructuary has to preserve the substance of the thing and carry out ordinary repairs and renewal work personally (art. 764 para. 1 CC).

• The usufructuary bears ordinary upkeep, operating costs, interest on the debts secured on the property and current taxes (art. 765 CC).
• The bare owner bears extraordinary charges, the roof, the central heating, anything touching the substance of the building.
• If the owner has been warned and does nothing, the usufructuary can have the necessary work carried out and recover the cost from the income of the usufruct (art. 764 paras. 2 and 3 CC).

The Federal Supreme Court has mapped the case of the owner who refuses to move, who can be formally put in default, with the judge sorting genuinely necessary work from work that is merely desirable (ATF 130 III 302). Family conflict starts right here, a parent who wants a new roof and children who would rather wait.

Usufruct or right of residence, which one passes property on?

The usufruct in almost every case. The right of residence of article 776 CC is reserved to natural persons, cannot be transferred, and dies with its holder instead of passing to the heirs. It grants the right to live in the property, not the right to collect rent.

A usufruct also covers the fruits of the property, which is exactly what saved the one on the chalet, the option of letting it even without being able to live there. If you hand over a flat today and let it out tomorrow, on moving into a care home for example, the usufruct leaves you an income and the right of residence leaves you empty-handed.

Vaud takes 3 % of the official tax estimate

Vaud law says it plainly, wealth burdened by a usufruct is taxed in the hands of the usufructuary. The child holding the bare ownership declares nothing on the property while the parent is alive.

For gift and inheritance duty, article 32 LMSD splits the tax base in two. The capitalised value of the usufruct is taxed at the kinship rate of the usufructuary, and the remainder, the burdened capital minus that value, at the kinship rate of the bare owner. The simplified valuation takes 3 % of the official tax estimate, mortgage debt deducted, and either party can ask for a valuation based on the average income of previous years once the situation has changed significantly.

The Vaud text also settles the normal exit, no tax is levied when the usufruct comes to an end. The death of the usufructuary, and the free surrender of a usufruct acquired for free, trigger nothing at all. A surrender for consideration does create gift duty or a transfer tax.

In Geneva, keeping the usufruct closes the discount

Article 26 LDE provides for a reduction in the taxed value when the bare ownership being given away is burdened by a usufruct in favour of a third party. That reduction does not apply when the usufruct stays with the donor, which is the parent-to-child gift exactly (art. 26 para. 2 LDE).

In a file decided in December 2016, the Geneva tax administration taxed the value of a usufruct on buildings at 3 %. Exemptions between close relatives also exist (art. 27A LDE). The detailed Geneva texts remain hard to reach online, so an owner pricing a gift will have the rates confirmed by the administration before signing.

Geneva has also clarified the border between the two rights. The cantonal tax authority long treated a right of residence like a usufruct for wealth tax, until a 2020 judgment held that a usufruct provides unlimited enjoyment, which a right of residence does not. Wealth tax and the supplementary property tax therefore fall on the bare owner in the case of a right of residence, a reading confirmed in 2021. For wealth tax, the person registered in the land register on 31 December, as owner or as usufructuary, is the one taxed.

A building right answers a different question

Its cousin in the Civil Code is no substitute. The building right, governed by articles 675 and 779 to 779l CC, lets its holder build on someone else’s land and own the building for as long as the right lasts, against a ground rent paid to the landowner.

It separates ownership of the land from ownership of the walls. A usufruct leaves that separation untouched and bears on the enjoyment of a property already built. Passing on an existing house while keeping its use is the usufruct, building on land you do not own is the building right.

In brief

The Swiss National Bank published the summary of its September monetary policy discussion on 22 October, with the policy rate held at 0 % and residential property prices still rising. The mortgage reference rate, which governs rent increases and decreases during a lease, stays at 1.25 % as it has since 2 September, and the next publication is expected in December.

In the canton of St Gallen, the Villa Wichenstain in Rorschach, built in 1901 by the inventor Victor Kobler, who held around eighty patents, opened to the public on 22 October ahead of a forced auction on 3 November. The debt enforcement office values it at 1.6 million francs after a private sale at 1.75 million found no buyer. A second, plainer house goes under the hammer in the same town the following day, valued at 750,000 francs.

In Geneva, the Grand Council voted on 29 October on PL 13732, the future law on real estate brokerage. As of 1 November the official record of the sitting still shows transcription in progress, so the outcome is not public.