Buying in France: Considering the Ownership Structure of Your French Property

Generally, the default position when buying a property in France, with another person, is to buy ‘indivision’. Each party to the purchase will own a proportion of the property. With spouses this is normally 50% each.

If Lily and William buy indivision, when they sell their property, each spouse will be entitled to 50% of the sale proceeds. When one spouse dies, their share of the property will pass under the terms of their Will, or the French succession rules.

In France, generally speaking, children have a right to inherit a proportion of their parents assets. This is because France employs a system of forced heirship, preventing parents from disinheriting their children.

In some cases it may be possible to delay the children’s entitlement until both parents have died, by ‘dismembering’ the ownership of the property, giving the surviving spouse the right to use the property for the rest of their life. This right is called an ‘usufruit’.

Another option to consider when buying would be to add a ‘tontine’ clause to the purchase deed (the acte de vente) at the time the property is purchased. On the death of the first spouse, the surviving spouse will be deemed to have owned the property outright from the date of purchase. Although this will ensure that the property remains in the hands of the surviving spouse, it may not be the most tax efficient option and could also lead to issues in the future if both spouses cannot agree on selling the property.

Lily and William should take advice on whether having a tontine clause is suitable for them, before they buy their home in Bordeaux. It would not be possible for them to add a tontine clause after they have bought their home.

If Lily and William decide to simply buy their property indivision, rather than en tontine, they can make a Will in which they leave their share of their home to the survivor of them.

However, whether the terms of their Will is followed in France will be dependent on a number of factors:

• do they have any children
• have they made a Will in which they elect British law (English law because that is the country within the UK with which Lily and William are most closely associated)
• do they, or any of their children, live in the EU or have EU nationality
• have they changed their matrimonial property regime, and
• have they entered into any agreements, other than Will, stating how their assets will be left on death, such as a donation entre époux.

At Stone King, we regularly deal with enquiries like Lily and William’s and can help them to explore their options on how to buy their property and structure their Will.