Head 1: Liferent (Usufruct)

Question 1

What is liferent?

Answer 1

Liferent (also called usufruct) is the right to use and enjoy a subject during life, without destroying the substance. (Bell Principles, § 1037.

It is
⁃ A right in favour of a person for the duration of their life
⁃ A right to use and enjoy property owned by someone else - but the liferenter must not damage the property
⁃ A subordinate real right[ This means that it encumbers the other party’s ownership and despite a transfer of ownership, the liferenter will still benefit from the right.]
⁃ Not a lease (normally there will be no periodic payments under life rent)

Question 2

Who is a liferenter?

Answer 2

Liferenter/liferentrix must be a natural person (cannot be a juristic person). They are the person entitled to use the property for life.

Question 3

Who is the Fiar?

Answer 3

Owner - the person who owns the thing that is the subject of the life rent in favour of the liferenter (holder of the right).

Question 4

Who is the Fee?

Answer 4

(the ownership that is encumbered): is a name for ownership given in this particular context, so the person who owns the land has the fee, and is therefore called the fiar. The fee is subject to this particular subordinate real right.

Question 5

What is Proper liferent?

Answer 5

When the liferenter has a subordinate real right

Question 6

What is Improper liferent?

Answer 6

Also trust life rent, benefificary life rent - an arrangement using trust law to achieve result similar to proper liferent.

Question 7

What happens in an improper liferent?

Answer 7

⁃ In an improper liferent, there is no subordinate real right; the rights are only personal.
- Ownership is vested in A (who has a real right of ownership), while B and C have personal rights against A. B’s right is that she is allowed to use the property as if she were the property liferentrix. C’s right si that when B dies, A must transfer ownership to him. In a trust lifter there are three peeple involved (trustee, improper liferenter and improper fiar).
⁃ Rather, the property is transferred to trustees and a condition of the transfer is that the trustees will allow beneficiary A[ Beneficiary A will have a personal right of use.] to live in the trust property until their death, when the trustees will transfer the property to beneficiary B[ Beneficiary B has a personal right to receive the property on the death of A.].
- So the person who “gets the property next” is already the owner.

Question 8

How are liferents created?

Answer 8

Liferents are normally granted over land[ It is competent to grant a liferent over corporeal or incorporeal moveable property but it is very unusual (especially in the case of proper liferent)].
⁃ As a result, writing will usually be required as a result of the RW(S)A 1995 s 1(2)(b). They must also be registered or recorded: Abolition of Feudal Tenure (S) Act 2000 s 65.

[In future, though not now and not for the purposes of the examination, the registration/recording of liferents will be governed by Land Registration (Scotland) Act 2012 s 51].

Question 9

What is a ‘conventional’ liferent?

Answer 9

A liferent can only be created deliberately and voluntarily by the person who grants the liferent

Question 10

Liferents can be created either by grant or reservation. What does this mean?

Answer 10

Grant[ This can be either mortis causa or inter vivos.]: the owner of the land grants liferent to another.

Reservation[ Can only be granted intervivos.]: the owner of the land sells the land to another person, and reserves a liferent in favour of himself.

Liferents created inter vivos can either be by grant or by reservation. Testamentary life rents obviously cannot be created by reservation.

Question 11

Law Reform (Miscellaneous Provisions) (Scotland) Act 1968, s.18

Answer 11

s.18 a life rent in favour of a person not yet alive will normally give that person a right to the fee, notwitstanding the original grantor’s intentions. This policy is to prevent property being tied up for unreasonably long periods.

Question 12

Does the nemo plus rule apply to liferents?

Answer 12

A liferenter can grant a lease. However, the liferenter cannot [Obviously under contract law, anything is possible - the liferenter can grant anything he likes. But under property law the liferenter can only grant rights which he himself holds.] grant a greater right than he himself has (an application of the nemo plus rule). As a result, any rights which a liferenter grants will also terminate on the death of the liferenter.

Question 13

Can a liferenter transfer or assign their right in the property?

Answer 13

No

Question 14

What obligations is the liferenter under other than not to damage or alter the property?

Answer 14

⁃	Rates
⁃	Council tax
⁃	Water and sewage bills
⁃	Insurance
⁃	NOT normally required to pay rent.[ It is not incompetent but it is highly unusual.]

Question 15

Can the liferenter sell their right to the property?

Answer 15

No -It is inalienable in that it cannot be transferred; but functional equivalent gives a personal right.

Question 16

What property can a liferent exist over?

Answer 16

Property subject to the liferent: a liferent can exist over corporeal heritable and moveable property (although it is rare for moveables - house plus contents is the only example). Whether there can be a liferent of incorporeal property is not wholly clear.

Question 17

What rules is the liferenter’s possession and enjoyment of the property subject to?

Answer 17

The liferenter is entitled to possess and enjoy the subjects, subject to the qualification that the enjoyment must be salva rerum substantia. They cannot grant real rights over the property or leave a legacy of liferent. A liferenter can grant a lease but such a lease will end when the liferent ends.

A life rent cannot be transferred. But it can be sold and the personal right claimed by the buyer is against the liferenter and so ends with the life renter’s termination.

The liferenter is not free to harm the substance of the property e.g. they are not free to demolish it.

A liferented house can be lived in, a liferented farm can be farmed, etc. The life renter’s possession may be either natural or civil.

Question 18

Is the right of the fiar subject to any qualifications?

Answer 18

In contrast the fiar can deal with the property in any way he likes, subject to the liferent (e.g. The fiar can grant a servitude but it is only enforceable if the liferenter agrees).

Question 19

When will a liferent be terminated?

Answer 19

1. A liferent will cease upon the death of the liferenter (then the fiar’s ownership ceases to be encumbered). However if the fiar dies the property is like any other property subject to a subordinate real right.
2. A liferent can also be renounced by the liferenter.
   ⁃ This can occur either at the time it was granted or during the liferent.
3. Confusion / consolidation: if the liferenter and fiar are the same person[ Either the owner somehow gains a liferent, or, more commonly, the liferenter becomes owner.] then the liferent disappears.
4. On destruction of the property it is not entirely clear in Scots law if destruction of the property ends the liferent.[ In Roman law this did terminate the liferent.] There have been suggestions that the liferenter or the fiar may be obliged to repair the property.
5. It is also unclear whether a liferent can negatively prescribe. The leading view[ On the basis of an interpretation of the Prescription and Limitation (S) Act 1973 - schedule 3 (imprescriptible rights) probably covers liferent.] is that it cannot.

Question 20

What happens if the liferenter is destroying the property?

Answer 20

The law in this area is ancient and ill-adapted.
⁃ This was highlighted in Stronach’s Exrs v Robertson:

⁃ Liferenter living in a house in Orkney for some time. They were not taking care of the property so it was being damaged. The fiar was annoyed so went to court seeking a remedy. The court held that the available remedies were inadequate. The fiar first asked for a decree “ad factum praestandum” (i.e. for the liferenter to fix the damage). While this was a remedy in Roman law it was not a remedy in Scots law. No damages are available since the fiar hasn’t suffered any loss yet. The only competent remedy is ‘caution’, by which the liferenter has to lodge money with the court to cover any potential damage[ This is very difficult to quantify.].
⁃ NB the court held that in the case of intentional damage there may be a different set of remedies.

Question 21

What happens if the liferenter becomes insolvent?

Answer 21

if the liferenter becomes insolvent, the creditors can attach the life rent, and likewise if the liferenter is sequestrated the deferent becomes an asset in the sequestration. But it cannot be realised by sale. The way its value is realised is by letting the property out, though any leases will end with the termination of the life rent itself. Alternatively, the trustee in sequestration could seek to do a deal with the fiar whereby the deferent would be renounced in exchange for payment. If the fiar becomes insolvent there are no special rules and the fiar’s creditors can attach the property. Since life rent is a real right, none of this affects the liferenter.

Question 22

What are life rent leases?

Answer 22

Liferent leases are not proper liferent - these are leases, not liferent.
One of the essential requirements of a lease is duration - in a liferent lease, the duration is said to be the life of the tenant.

Question 23

Mountain’s Trustees v Mountain 2013

Answer 23

⁃ Mountain left land to one of his son’s: William. He also wanted to look after the interests of his other son, Edward. So in his will he set up a trust which required the trustees to transfer the land in question to William, but on the condition that his other son Edward will get a (lifelong) lease over the land. There was also a condition that if Edward chose not to farm the land then the lease would come to an end too. The trustees were worried because in order to have a valid lease you must have a certain ascertainable duration (Gray). A lease for the lifetime of the tenant is allowed but they were concerned that the farming condition was too vague.
⁃ So the trustees went to the Court of Session to determine whether this lease could be valid or invalid. The court held this was a valid liferent lease, despite the fact that it would end if Edward stopped farming. The court also emphasised that where a tenant dies in this type of lease, then the lease is terminated.

Question 24

What are the remedies available to the fiar?

Answer 24

The remedies available to the fiar to protect the subjects of the liferent are complex and imperfect: Stronach’s Excrs v Robertson 2002 SC 540.