Short answer. Commodatum is the free loan of a thing: you get the use of something without paying for it, and you must give back the very same item. An ordinary loan of money or goods works differently — you return an equivalent, not the identical thing. Either movable or immovable property can be lent this way.
What the law says
Movable or immovable property may be the object of commodatum.
Civil Code, Article 1937 — Object of Commodatum. Read the full provision →
The free loan of a thing
Commodatum is the Civil Code's name for the free loan of a thing. Someone lets you use something of his, you pay nothing for the use, and you must hand back the very same item when the loan ends. Article 1937 settles a question many people assume the other way around: Movable or immovable property may be the object of commodatum. So it is not confined to tools, vehicles and equipment. Land and buildings can be lent this way too — which is exactly what is happening when a relative is allowed to occupy a family lot rent-free, with no lease and nothing paid.
How it differs from an ordinary loan
The difference is what comes back. In a free loan of a thing you return the identical item: the same car, the same house, the same machine. In an ordinary loan of money or goods you return an equivalent — other pesos, other sacks of rice of the same kind and quality. That single difference drives everything else. Because the item itself must come back, ownership never passes to the borrower; he has the use of the thing, not the thing. And because nothing is paid for the use, the arrangement is a favour, which is why the law asks rather more of the borrower's care.
What the borrower takes on
A borrower must use the thing for the purpose agreed and no other, look after it as a careful person would, and return it when the loan ends. He does not acquire it because a long time has passed, and he does not become owner by occupying or using it for years. Ordinary wear from the agreed use is expected; damage from misuse is not. Being free does not make the arrangement casual, either. A borrower who holds on to the thing after being asked to give it back is in a far weaker position than he usually imagines.
What it is not — and protecting both sides
It is not a lease: charge rent or any other payment for the use and the arrangement becomes something else. It is not a gift, so a lender does not lose his property by lending it. And it is not a permanent right of occupation, which is where family arrangements over land most often go wrong. Put it in writing even between relatives — identify the property, state that the use is free, say what it may be used for, and say how the arrangement ends. When these disputes reach a court, it is the absence of a document that makes them long and bitter.