Ownership splitting is a common mechanism in real estate, particularly in the context of an inheritance, a donation or an investment. It divides full ownership into two distinct rights: usufruct and bare ownership. This article explains the definitions, key differences and implications in the event of a sale. Your Capifrance advisor can assist you in these situations.
What is ownership splitting?
Ownership splitting consists of dividing full ownership of a property into two distinct rights: usufruct and bare ownership. This separation distributes the three attributes of property rights between two parties. Usus refers to the right to use the property, fructus corresponds to receiving income from it, and abusus represents the right to dispose of the property. This legal mechanism is governed by the French Civil Code (article 543) and helps structure wealth transfer.
What is usufruct and bare ownership?
Each role includes distinct rights over the property, defined by the Civil Code.
Definition of the usufructuary
The usufructuary holds the usus and the fructus, meaning the right to use the property and to receive income from it. In practical terms, they can live in the property as their main residence or rent it out and collect the rent. This right is often granted for life, particularly when the surviving spouse retains usufruct while the children become bare owners.
Definition of the bare owner
The bare owner holds the abusus, meaning the legal right to dispose of the property. They can sell or donate their share of bare ownership, but cannot occupy the property or receive income from it as long as the usufruct exists. Full ownership is automatically recovered when the usufruct ends.
What is the difference between usufructuary and bare owner?
The differences between a usufructuary and a bare owner are based on the distribution of rights over the property:
Criterion — Usufructuary — Bare owner
Right of use — Can occupy the property or rent it out — Cannot live in or rent the property
Income — Receives rental income if the property is rented — Receives no income from the property
Right to sell or donate — Can only sell the usufruct — Can sell or donate bare ownership
Value of the right — Depends on the age of the usufructuary — Reduced value due to discount
Transfer at death — Ends automatically — Becomes full owner
The value of bare ownership is calculated according to a tax scale based on the age of the usufructuary. The younger the usufructuary, the greater the discount.
What are the rights and obligations during a property sale?
The sale of a split ownership property involves specific rules for both parties.
Distribution of the sale price between usufructuary and bare owner
To sell full ownership, the agreement of both parties is required. The sale price is then distributed according to a tax scale set by article 669 of the French General Tax Code, based on the age of the usufructuary. For example, if the usufructuary is between 71 and 81 years old, their usufruct represents 30% of the property value and bare ownership 70%.
Who pays for repairs and property tax?
The distribution of costs between usufructuary and bare owner follows precise rules:
Property tax → usufructuary
Major repairs (structural work) → bare owner
Routine maintenance → usufructuary
Insurance → depending on occupancy of the property
Major repairs remain the responsibility of the bare owner, unless they result from a lack of maintenance.
Frequently asked questions about bare owners and usufructuaries
How does someone become a bare owner?
A person becomes a bare owner mainly through inheritance, when the surviving spouse retains usufruct and the children inherit bare ownership. Donating bare ownership is also a common way to transfer assets while retaining use of the property. Finally, purchasing bare ownership can be a strategic investment, particularly through the acquisition of shares in SCPI property funds.
What is full ownership?
Full ownership is the combination of usufruct and bare ownership over the same property. It is automatically restored upon the death of the usufructuary, without additional transfer taxes. In the case of a temporary ownership split, full ownership returns to the bare owner when the fixed term expires. This reunification restores all property rights.
Who pays condominium fees: usufructuary or bare owner?
Routine condominium charges are the responsibility of the usufructuary, as are housing tax and routine maintenance expenses. However, major repairs affecting the structure of the property are the responsibility of the bare owner according to the Civil Code. The condominium regulations may nevertheless include a joint liability clause allowing the property manager to request payment from either party.
Author :
Frédéric Rémy – Director of Commercial Performance
A real estate professional for several years within the Capifrance network, I would like to share with you some essential advice to help you succeed in your real estate project with the support of our advisors.
