The tontine agreement: French rights of survivorship

In France, adding a Tontine Clause to your purchase contract will have long lasting repercussions.  Real estate is often owned by multiple individuals.  When multiple individuals own a piece of real property, concerns may arise about the status of the property after the demise of one of the owners.  In France, the issue of rights of survivorship can be addressed by use of the Tontine agreement.

The purpose of the tontine clause is to ensure that when multiple individuals own a piece of real property, ownership passes to the surviving owners when there is a death.  All owners must agree to the tontine clause for it to be inserted into a purchase contract.  The tontine clause must be added to the contract at the time of purchase, not after.

While similar rights of survivorship are common in countries such as England and the United States, historically the tontine clause is not often used in France and even disliked by some notaires because of the far reaching consequences it has.

The only way to remove a tontine clause after purchase is by agreement from all owners.  This can cause complications in divorce situations where the parties can not come to an agreement on how to handle the property.  The tontine clause has also been known to cause difficulties in obtaining a loan.

The tontine agreement can be subject to other laws.  When considering whether to add a tontine clause into your purchase contract, it is important to consider how it and each owner will be impacted by marital laws and inheritance tax laws.  This matter can become further complicated if the owners are subject to the laws of more than one country.

Ownership in a property not subject to a tontine agreement is called “indivision” ownership.  A property acquired by indivision ownership, even among spouses, will pass to each owner’s heirs rather than the other owner of the property.

To conclude, if you are purchasing real estate in France with another individual, it is important to consider at the time of purchase, what will happen to the property upon your demise.  If you are unsure of how various laws will effect your situation, consult a professional.

by Cheryl Hartzman, AboutFrenchProperty.com - Copyright © About French Property