October 28, 2026, 11:21 am | Read time: 7 minutes
Many parents transfer their house to their children while still alive. Through a usufruct, they secure the right to continue living in it or renting it out. Then the roof starts leaking or the old heating system fails. Who bears the costs? myHOMEBOOK asked Haus & Grund Deutschland what to consider when renovating a property with usufruct.
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What is a Usufruct?
With a property under usufruct, there are two parties. The owner holds the title to the house. The usufructuary uses it. Their relationship is defined by a transfer agreement. Both parties sign it at a notary. It governs the transfer of the house and the usufruct.
However, the contract does not always clarify the cost issue. At the latest, during repairs and renovations, the interests of the owner and the usufructuary clash. “For fundamental decisions about the property, the owner is generally responsible,” clarifies Luisa Peitz, legal advisor at Haus & Grund Deutschland in Berlin. The law is less clear about who pays which bill.
How Do Right of Residence and Usufruct Differ?
First, it’s worth looking at the difference from the right of residence. Usufruct extends significantly further. The usufructuary may live in the property themselves. They may also rent it out and keep the rental income. The basis for this is § 1030 BGB.
A right of residence under § 1093 BGB essentially only allows the use of the relevant rooms as a residence. Therefore, the person with the right of residence generally cannot rent it out. Simply put, the person with the right of residence can live in the house. The usufructuary can also earn from it.
Minor Repairs Are Paid by the Usufructuary
Anyone who uses a property or earns from it is also responsible for its maintenance. This basic rule is found in § 1041 BGB. According to this, the usufructuary maintains the property in its economic condition. However, they only undertake repairs and renewals as part of regular maintenance.
Regular maintenance includes tasks that recur regularly and at shorter intervals with proper management. These include typical wear-and-tear repairs. Larger measures that occur only occasionally are considered extraordinary. “The costs alone do not decide. It mainly depends on the type, scope, and recurrence of the measure,” Peitz specifies.
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The roof illustrates the boundary: If it leaks in one spot, the usufructuary pays for the repair. A complete roof renewal, however, is generally not part of regular maintenance. The boundary is similar for heating. The usufructuary covers maintenance and ongoing costs. The Munich Higher Regional Court confirmed this in 2022 for the heating and maintenance costs of a shared heating system (Az. 8 U 1186/22). Whether a new heating system is included depends on the reason and scope.
“An unrestricted legal obligation for the owner to pay does not automatically follow in these cases,” Peitz limits. The law does not obligate the owner to carry out or pay for extraordinary repairs for the usufructuary. Peitz therefore advises explicitly regulating in the transfer agreement who is responsible for major repairs and modernizations.
Energy Renovation and Legal Obligations
Of course, there are also energy measures to be implemented when renovating a property with usufruct. Here, the roles are clearly defined. The usufructuary may not alter or significantly change the property (§ 1037 BGB). They must generally tolerate necessary maintenance measures by the owner (§ 1044 BGB).
For a comprehensive energy renovation, Peitz recommends a joint approach. Both parties should clarify financing, process, and possible usage restrictions in advance. This should also be included in the transfer agreement, according to Peitz.
Also interesting: The ideal order of energy renovation
Regarding legal obligations, Peitz distinguishes two levels. For many building-related requirements, the owner is obligated to the state. Peitz refers to the Building Modernization Act (GModG). The Bundestag and Bundesrat passed it in July 2026. It replaces the Building Energy Act. Some rules are already in effect. For numerous heating and building obligations, it explicitly names the building owner.
The second level concerns costs between the two parties. According to § 1047 BGB, the usufructuary bears certain ongoing public charges. These include property tax and fees for waste disposal, street cleaning, or chimney sweeping. Extraordinary charges affecting the property’s value itself are excluded. Lawyers refer to the principal value. An example is development contributions, such as for building a road in front of the house. These remain the owner’s responsibility.
Subsidies and Taxes
When it comes to subsidies, the owner is often responsible. Each subsidy program sets its own rules for who may apply. For the current KfW heating subsidy, the owner registered in the land register is generally eligible to apply. A usufructuary or person with the right of residence does not apply themselves. According to Peitz, eligibility for subsidies should be examined before commissioning. Since July 21, 2026, new conditions apply at KfW. The basic subsidy remains at 30 percent of the costs. Bonuses are added, for example, depending on income.
For rented properties, the tax question also arises. In the classic reserved usufruct, the usufructuary usually earns the income from renting. Self-borne maintenance expenses are generally deductible as advertising costs, provided the tax requirements are met. The owner, on the other hand, cannot easily claim their expenses. Both parties should ideally coordinate major renovations with a tax advisor in advance, recommends the expert from Haus & Grund Deutschland.
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When the Owner Doesn’t Pay
It becomes difficult if the owner refuses a necessary repair or cannot pay. If an extraordinary repair is needed, the usufructuary promptly informs the owner. This is required by § 1042 BGB.
If the usufructuary carries out work they are not obligated to, a claim for reimbursement under § 1049 BGB may arise. However, this claim does not automatically exist. The law refers to the rules of so-called management without mandate. This means a matter is handled by someone for another without being commissioned. The usufructuary only gets their money back under § 683 BGB if the work is in the owner’s interest and corresponds to their actual or presumed will. If the owner has explicitly rejected a renovation, this requirement is usually missing.
That’s precisely why Peitz warns against going it alone. A usufructuary should not independently commission a major renovation and expect to pass on the bill later. Otherwise, they may be left with the costs. For such cases, she recommends clear rules in the contract.
What Should Be in the Transfer Agreement for Usufruct
The transfer agreement first needs a clear description of the usufruct and an entry in the land register. For practical purposes, a clear cost regulation is just as important. Haus & Grund recommends explicitly noting the following points:
- Who pays for ongoing repairs?
- Who is responsible for major repairs?
- Who covers modernizations and energy renovations?
- Who pays for insurance and public charges?
- Who submits subsidy applications?
- What access and participation rights apply?
- Can the usufructuary rent out the property and under what conditions?
- Who decides on major structural changes?
- Who finances a measure upfront and how is reimbursement handled?
“The more precisely the parties regulate these points, the less conflict arises later,” Peitz summarizes.
Older contracts can also be adjusted. Owners and usufructuaries can amend or supplement their agreements by mutual consent. According to Peitz, this is particularly worthwhile for contracts from a time when energy renovations, new heating requirements, and today’s subsidy landscape were not relevant. The situation is different for the usufruct right in the land register. To change, limit, or cancel it, additional notarial declarations and a change in the land register are usually required.