8. Joint Ownership of French Property
- Joint Ownership 'En Indivision'
- 'En Indivision' for Married Couples
- 'En Indivision' for Unrelated Persons
- Joint Ownership 'En Tontine'
8.1. Ownership of French Property 'En Indivision'
This is the most common method of joint ownership and in English law is equivalent to a ‘tenancy in common’.
The property is purchased by two or more persons, with each one holding a stake in the property in whatever terms that may be decided between them.
In the case of a couple this would normally be in equal shares but, where there are more than two purchasers, it may be in proportion to the amount each person contributed in financing the purchase e.g. 70% / 20% / 10%.
Where the property is purchased in unequal shares then you may wish to ensure that the source of funds from each party is clearly identified to avoid possible later difficulties with the French tax authorities concerning gifts tax.
If you wish to own in equal shares, but with different contributions, then make it clear in the legal documentation that the larger contribution is not a gift, but a loan.
The issue is also important from the perspective of later separation or divorce. Unless, at the time of purchase the different contributions of each party are reflected in the ownership structure the property will be owned on an equal basis by all owners, and the later sale proceeds of the property will be divided in equal shares between all owners.
One of the key features of indivision is the decision making process that applies. Not surprisingly, all the owners are entitled to participate in decisions concerning the property.
This may not ordinarily be an issue between a couple, but could be a problem between several unrelated people, or following an inheritance, when the property may be shared between several inheritors.
Thus, the law requires that decisions concerning the property are made by at least a two-thirds majority of the owners.
Strictly speaking, only emergency actions can be taken by only one of the owners.
However, even the two-thirds rule is not absolute for in exceptional circumstances one or more of the owners can demand that the property is sold, if they consider that it is in the overwhelming interests of the indivision to do so.
It is quite possible that a single owner holds at least two-thirds of the ownership of the property, but this does not grant them the automatic right to do as they please with it.
In all decisions concerning the property a fairly strict and lengthy procedure applies, particularly regarding the sale of the property.
You should be guided by the notaire in the sale process, whose responsibility it is to ensure that minority interests are heard.
If no agreement can be reached it would be necessary to apply to the court for an order to be obtained authorising the sale of the property. However, do not hold your breath the matter could be resolved quickly. Delays in the judicial process mean that it is likely to be up to three years before a hearing could take place, with a right of appeal to either side.
Moreover, if not all of the owners can be traced, then it may not be possible for the matter to be considered by the courts.
One of the owners can also dispose by way of sale or gift that part of the property they own. In the case of sale of their part of the property they are obliged to grant a right of pre-emption to existing owners. This rule does not apply where disposal is by way of gift.
The most appropriate way of managing a property held by several different (particularly if unrelated or extended family) owners, is to draw up a management agreement, called a convention d'indivision, which is considered in the following pages.
We next examine the implications of indivision from the point of view of married and unmarried/unrelated owners.
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