The following is a detailed explanation of the relationship between usufruct and security interest:
First, the aspects of domination of the subject matter are different.
The usufructuary right is mainly concerned with the use value of the thing, that is, the physical property right. This means that the usufructuary may use, possess and enjoy the actual benefits of the thing. For example, the right to contract land management allows the contractor to use the land for agricultural production and to receive benefits from it.
On the other hand, a security interest is mainly concerned with the exchange value of the thing, that is, the right of value. The primary function of a security interest is to provide security for a claim to ensure that the creditor can recover the amount owed by exercising the security interest in the event that the debt is not paid. For example, mortgages and pledges allow creditors to recover their debts by auctioning or selling them when their debts are not paid.
2. The usufructuary right is an independent property right, and the security interest is a subordinate property right.
The usufructuary right is an independent property right, and its existence does not depend on other rights or legal relationships. The usufructuary right holder can directly control and use the thing without interference from others.
On the other hand, a security interest is a subordinate right, and its existence depends on the existence of the principal claim. The main function of a security interest is to provide security for the main claim to ensure the realization of the main claim. If the principal claim does not exist or has been satisfied, the security interest is extinguished.
3. The time of realization of the right is different.
The acquisition of the usufructuary right and the realization of the right occur at the same time. Once the usufructuary acquires the usufructuary right, he can immediately use the thing and receive the benefits.
After the security interest is acquired, it is necessary to wait for the secured debt to mature and not be paid off before the right can be exercised. This means that the holder of the security interest cannot exercise the security interest at will until the debt matures.
4. The status of possession in the exercise of rights is different.
The exercise of the usufructuary right must be premised on possession of the subject matter. This means that the usufructuary owner must actually possess and use the thing in order to enjoy the benefits of the thing.
However, the exercise of a security interest does not have to be in possession of the subject matter (except for the right of retention and pledge). For example, a mortgagee can obtain security by creating a mortgage on the collateral without having to take physical possession of the collateral.
Fifth, the two are different in subrogation in kind.
A security interest is subrogated in rem, that is, when the collateral is damaged, lost or expropriated, the security interest holder can be compensated in priority for the insurance, compensation or compensation obtained. This means that even if the collateral changes, the rights of the security interest holder can still be safeguarded.
On the other hand, usufruct rights do not have in rem subrogation. If the object to which the usufructuary right refers is destroyed, lost or expropriated, the rights of the usufructuary owner will be extinguished.