French property rights: How does tontine clause work on first death?

We look at the steps to be taken in the event of the death of one of the couple and the costs involved.

Question

Where a couple have bought a property with a tontine clause, what, if anything, needs to happen on first death? And, if a formal transfer is required, what is the appropriate notaire’s fee?

Answer

The inclusion of a tontine clause in the purchase deed of a property has long been popular among British buyers, especially where either or both have children from another relationship.

It works to ensure the survivor of the couple becomes the sole owner.

When a property is held en tontine, it devolves to the survivor without being subject to the usual rules of French inheritance law. The children of the first to die would not automatically be entitled to inherit from their deceased parent, as is commonly otherwise the case.

There may be limited rights for disinherited children to argue that the tontine clause should be disregarded, but it is generally accepted this would not be a simple claim to run.

When including a tontine clause in the title deed, the couple should be of similar age and life expectancy (a gap of 15 years or so is unlikely to cause concern), and should contribute equally.

Presuming there is to be no challenge (they are rare), the survivor can ask a notaire to update the title deed to reflect that the property is held in his or her name only. There is no formal transfer of title involved, but the notaire will charge a variable fee, likely to be around €1,000 to €2,000, to update the deeds.

There are further points to bear in mind. First, presuming the couple were married or civil partners, there would be no inheritance tax. If not, there may be inheritance tax of up to 60% on the deceased’s half share.

Secondly, if the owners are French-resident, the tontine affects only the house. Other assets may still be subject to French law, so consider preparing a will.

A tontine clause can only be inserted at the time of the purchase, not after, and does have disadvantages. Seek specialist advice.

This article was first published in response to a reader query in The Connexion – May 2022.