What is the tontine option for property in France?

Reader question: I have seen tontine clauses mentioned in previous Connexion articles. What are the benefits when buying property?

The tontine clause is an option when buying French property as a couple, whereby ownership goes directly to the survivor when one of them dies. 

This can simplify inheritance matters and, notably, it can help mitigate effects of the 2021 French inheritance law which offers children the right to claim ‘compensation’ if a parent’s estate is passed on under a foreign law system lacking obligatory heirs’ portions.

This may happen, notably, where the parent used EU rights to choose the law of their nationality where it is perhaps more flexible than French law (eg. English, or many US states’).

The tontine – which must be discussed with the notaire at the time of purchase – is worth considering if you are buying French property for the first time or if you are considering selling your current home to buy an alternative property.

The effect of this clause in the purchase deed is that on the death of the first member of a couple the whole ownership of the property goes to the other as if it had always been theirs. 

The deceased partner’s right is extinguished and the survivor is not seen as having ‘inherited’ it from them as regards succession law.

Where a person’s estate is passed on under French inheritance law, ‘disappointed’ heirs may occasionally seek court action to challenge a tontine if they believe they have not had their usual French law ‘reserved portion’ and have evidence that the tontine was used to disinherit them. 

However, the mechanism is generally safe if there was not a great difference in financial contributions to the purchase by the members of a couple or a great difference in age. 

There is meant to be reasonable uncertainty as to which of the two will die first.

Bilingual notaire François Trémosa from Toulouse, said: “A tontine is particularly appropriate for couples who have children from different relationships and want the survivor to be the sole owner.

“A tontine will be out of the scope of the 2021 law since the mechanism is not related to succession law, but to property law, and has long been established - since the 1750s. 

"And to wrap it all up (and to cover savings and other assets), it is a good idea to designate English [or another relevant foreign] law.”

 It is important to remember that a tontine cannot be created after purchase. 

Note that this does not alter taxation rules (for example, if a cohabiting couple buy in this way the survivor will pay 60% tax on the half of the house value received).

Once set up, it is possible for one party to withdraw from it if they wish, by a deed signed before a notaire.

While most commonly used by residents of France, non-residents' second homes can also be purchased with a tontine clause.