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Specialist in French Property Law Strap Line

The most advantageous vehicle for your purchase and ownership

The agent immobilier (estate agent)

The notaire

The purchasing process

The UK surveyor in France






The most advantageous vehicle for your French Property Puchase and Legal Ownership


This will depend upon the circumstances of the individual as they relate to the purpose of the purchase, and will involve consideration of how the purchaser wishes to organise the estate for the period of the ownership and to whom he/she may wish to leave it in consideration of his/her own and the inheritor’s tax position.

In an attempt to achieve the ideal formula, it is preferable to have discussed and planned a strategy with your legal/tax representative in advance. That said experience tells us that this is not always practicable. Therefore, purchasers can be assured that much can be done after the signing of the initial purchase contract albeit that this may require swift action during the seven-day ‘cooling of’ period. We remain responsive to these needs but emphasise that there are distinct advantages in taking independent legal advice at the earliest possible juncture and preferably before signing the initial purchase contract (compromis de vente or contrat de réservation).

After examination of your personal circumstances, consideration should be given to the following possibilities:

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Purchasing in indivision is a similar structure to the default common law position we recognise in the UK as a tenancy in common, where each owner owns a share of the property and upon the demise of the first partner the deceased partner’s interest passes to his or her estate and not automatically to the surviving spouse. In France the estate is devolved in accordance with French inheritance law, which affords limited provision for the surviving spouse. Where the deceased had children a proportion of the estate must pass to them, and where there are no children surviving parents have a reserved share. The surviving spouse has a limited entitlement in these circumstances. Where purchasers are unmarried the situation is even more unsatisfactory for the surviving partner as blood relatives will inherit the deceased partner’s share unless other provision is made taking into account any reserved heirs’ entitlement, added to which any legacy received by the surviving partner will be taxed at 60%. As a result of the forced heirship rules, only a percentage of a person’s estate can be freely dealt with under a will. The notaire will consider indivision to be the default position unless instructed otherwise. There are a number of mechanisms that may be used in order to ameliorate the situation, which we outline briefly below.

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The Hague convention of March 1978, came into force in France in 1992 and allows married couples to designate a jurisdiction to which their marriage will be subject. The general principle is that a couple’s marriage is subject to the law in force in the country of their habitual residence. The couple may however elect to designate the law of the country in which they own real estate. This allows couples married in the UK to adopt a French matrimonial regime if they own property in France .

To exemplify, where a couple are married in England and are resident in England, their marriage will be governed by the English system. In France there are a number of different marital regimes. The English system is assimilated to the French regime of the “séparation de biens”, which means basically that as opposed to the general regime in France whereby the assets of the couple are held by them both in a sort of common fund, in the regime of the séparation de biens each spouse holds their own individual assets separately from the other. English couples who purchase property in France often take advantage of the possibility afforded by the Hague Convention to partially adapt their marital regime under French law in relation to their immoveable property situated in France and adopt a common fund to cater for their French assets. In every other way their marriage remains subject to the English system.

The net effect of this partial change of marriage regime is to place the immovable assets, i.e. French real estate, into the matrimonial fund, which will then automatically pass to the surviving spouse on the demise of the first partner. This mirrors the effect of the clause tontine but offers substantial tax advantages on the inheritance position upon the demise of the second partner. Capital growth and the acquisition of further immovable assets within France are automatically dealt within the fund. There are disadvantages to this mechanism which arise in particular should be children from a previous relationship/s individual circumstances will need individual assessment.

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The PACS agreement has become increasingly popular in France since its introduction in November 1999. The PACS is a legal partnership agreement between two adults of either the same sex or opposite sex. It creates an obligation of mutual assistance incumbent upon both partners and affords rights concerning for example social security benefits, housing and employment. Allowances apply with respect to taxes in particular inheritance tax and gift tax, in addition to which the rates of imposition are more favourable than the 60% rate applicable where beneficiaries are unmarried or unrelated to the testator or donor. The PACS agreement does not however afford the surviving partner any inheritance rights and therefore each partner should make a will. The deceased partner can leave all his/her estate to the surviving partner if there are no descendants or ascendants. In the event that there are heirs the deceased can will his/her share in the joint property to the surviving partner on condition that the heirs are suitably compensated. There is no limitation as to nationality however people who are not French must be resident in France in order to make a PACS agreement.

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Historically the clause de tontine has been much favoured by UK purchasers of French real estate as it has been seen as a solution to the inheritance/succession situation under French law whilst protecting the interests of the surviving spouse. It was first introduced to France by the Italian banker Lorenzo Tonti back in 17 th century for the purpose of multi subscriber purchases of real estate investment. Each subscriber paid a sum into the fund and received a divided payment from the investment. As each investor died, their share was divided amongst the others until only one remained. In its contemporary application the tontine clause (or clause d’accroissement) is a mechanism whereby ownership of the property passes to the surviving partner, who upon the death of the first partner is considered retrospectively to have been the sole owner since the date of acquisition. The tontine clause must be inserted at the time of signing the original purchase title deed (acte de vente). It can only be revoked by agreement between the parties and this must be done by notarised deed of renunciation. Some notaires are reluctant to include the tontine clause, as they perceive it as dangerous by virtue of its rigidity. The general situation is that where a property is purchased jointly all owners have to be in agreement to sell, lease or to constitute a charge over the property. If an agreement cannot be reached the owners can ultimately appeal to the court to resolve the issue. However where a purchase is made en tontine , should for example one owner wishes to sell and the other not, if there exists no possibility of amicable agreement the owners are locked into the situation literally until death. Notwithstanding this disadvantage the clause itself is challengeable under certain circumstances where for example potentially aggrieved third parties could claim that the clause was simply a device to circumnavigate the inheritance rules in order to disinherit a valid heir. Under certain conditions such a challenge may well succeed. However, all being well the surviving partner does become the absolute owner and has complete freedom of action over the property as if the first partner had never had an interest in the estate. This replicates the state of affairs we in the UK recognise as joint tenancy. Finally it should be considered that the tontine does leave the inheritance situation upon the demise of the survivor open to significant tax disadvantages. Therefore, it is wise to seek personally tailored advice as alternatives exist that may better cater to your needs providing a more inheritance tax advantageous outcome.

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This is a French non-commercial property-owning company. It is a mechanism which has until recently been popular with UK and Irish purchasers, however since the Chancellor decided that benefit from these companies should be treated as a benefit in kind and taxed accordingly the S.C.I. (société civile immobilière) has somewhat fallen out of favour. However, the French did not design this structure for the benefit of foreign owners. As such, there are still a number of situations where the vehicle can be of benefit particularly under circumstances where there are multiple purchasers, there is a commercial enterprise attached to the purchase of the realty, and/or there are children from previous relationships to consider. It is also possible to appoint a French gérant (manager) which may address many of the recently emergent difficulties. Again, individual circumstances and requirements would need to be examined in order to determine whether this might be the right vehicle for you.

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As explained above, the default mechanism for purchasing in France is indivision, which means that each purchaser purchases an undivided share in the ownership of the property. For example where a couple purchase each partner will generally have a half share. In the absence of any other option being taken by the couple, upon the death of each partner that person’s share will pass to his/her heirs (and not to the surviving spouse/partner).

It is possible under French law to split the ownership of property into the usufruit, broadly equivalent to the concept of the life tenancy, and the nue-propriété, or bare ownership. The former is the right to use and bear the fruits of the property, such as the right to live in the property and to receive income, interest and rents. The latter is the right to dispose of the property. The usufruit ends when the usufruitier dies and the full ownership of the property rests with the nu-propriétaire.

It can be beneficial for unmarried couples to use the technique of the achat croisé. Each partner purchases the usufruit of half of the property and the bare ownership of the other half. Upon the death of one of the purchasers the survivor automatically receives the usufruit of the other partner’s half. The deceased partner’s bare ownership over half of the property enters into his/her estate and passes to his/her heirs, however the surviving partner is assured of owning a half share in full ownership with a life tenancy over the other half.

Alternatively it is possible for one purchaser to purchase a life tenancy over the whole and for the other to purchase the bare ownership over the whole. In this way rather than each purchaser having a separate half share (or other proportion) each partner has a right over the whole property. Other permutations are also possible including the purchase by a couple with each partner buying the bare ownership over half with the life tenancy in tontine. This structure is only suitable under particular circumstances and there may be tax disadvantages for example where the person purchasing the bare ownership is a presumed heir of the life tenant the French tax authorities may presume it to be a gift and will seek to tax accordingly. Purchasing in split ownership may provide a solution in certain circumstances however expert advice should be taken before embarking upon this type of purchase.

Achat/vente en viager

This type of transaction involves the purchase of the bare ownership with the retention of a life tenancy by the vendor, in return for a lump sum payment at the time of the purchase with payment of an annuity for life. The purchaser has the bare ownership during the lifetime of the vendor upon whose death becomes full owner. This can be advantageous for both the vendor and purchaser depending upon individual circumstances.

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The concept of the trust is unknown in French law, as a consequence of which the French legal and tax systems have difficulty in understanding its nature and in dealing with the effects of an English trust in France . As a result, such a trust though correctly constituted in the UK, may be ineffective in practical terms in France . There have for some time been calls for the Anglo Saxon trust to be introduced into the French system however the legislature has shown a distinct reticence due to the difficulty in introducing such an alien concept into the existing French system. For a number of reasons therefore, at least for the time being, it would be best to avoid purchasing with a trust. Expert advice should be taken where beneficiaries of an English trust are or may be liable to tax in France .

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Executors or Trustees of UK estates have limited power over French assets. Attempts to administer them under a UK Will could prove time consuming and therefore costly. It follows that it may be advantageous to make a French will to cover French immovable assets whilst simultaneously reviewing your UK will, taking care to ensure that no conflict exists and making provision for the disposable part of the French estate having perfected your strategy under the French inheritance succession rules.

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