Article 544 of the French Civil Code defines ownership as "the right to enjoy and dispose of things in the most absolute manner, provided that they are not used in a way prohibited by laws or regulations".
Traditionally, ownership is considered to involve the combination of three elements:
-abusus: the right to dispose of property, such as selling or giving it away,
- fructus: the right to receive the fruits of one's property, such as rent,
-usus: the right to use property, such as living in your own home.
Dismemberment of ownership consists of allocating these different rights to different people. The best-known way is to give bare ownership of your property to your children, while retaining usufruct.
The dismemberment of ownership is not joint ownership because it creates rights of different kinds. However, it is still possible to have joint ownership of the usufruct and/or bare ownership.
You can split ownership of any property(house, flat, land, etc.), as well as tangible or intangible movable property. There are also a number of advantages to joint ownership of shares in a non-trading property company, in particular cases.
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The bare owner
The bare owner has the right of abusus: he or she can therefore dispose of the property, but always within the limits of the usufructuary's rights. In practice, the right to dispose of the property, for example by selling or giving it away, is very limited. The bare owner will only be able to sell the bare ownership. The purchaser will not be able to live in the property or rent it out, as these prerogatives are reserved for the beneficial owner.
The bare owner recovers full ownership either on the death of the usufructuary, or following the sale or gift of the usufruct to him or her.
Obligations of the bare owner :
The bare owner must refrain from interfering with the usufructuary's rights, in particular the right to enjoy the dismembered property.
When a property is stripped, the bare owner is required to pay for major repairs, i.e. those relating to the structure and general soundness of the building. This type of work includes repairing the roof or load-bearing walls.
The scope of this breakdown should be put into perspective. While major repairs are the responsibility of the bare owner, there is no way for the usufructuary to force them to be carried out.
The usufructuary may, however, take responsibility for such work, with the possibility of being compensated at the end of the dismemberment (with the exception of improvement work).
As these rules are not a matter of public policy, it is entirely possible to arrange the life of the dismemberment by agreement in order to avoid any difficulties.
The usufructuary
The usufructuary has the fructus (right to collect the fruits) and the usus (right of use). Usufruct generally belongs to parents who have given bare ownership to their children. This allows them to retain the use of their main home, for example, or to receive rent from a flat they rent out, while anticipating the transfer of their estate.
The usufructuary can sell, donate or mortgage the usufruct. However, usufruct lapses automatically on the death of the original usufructuary.
Unless there is an agreement to the contrary, the usufructuary is free to let the dismembered property without the consent of the bare owner. However, a lease of more than nine years requires the agreement of the bare owner in order to guarantee the tenant's rights. If the usufruct is terminated before the end of the lease term, the lease can be terminated at any time by the bare owner.
Obligations of the usufructuary :
The usufructuary is obliged to enjoy the property as a good father of the family. He must therefore behave towards the property as if he were the owner, with the care that this implies. In particular, the usufructuary must ensure the conservation of the dismembered property and respect its intended use.
To guarantee this obligation, the usufructuary must draw up a description of the buildings and an inventory of the furniture at the time of dismemberment. The usufructuary must also provide a guarantee. In practice, this latter obligation is rarely implemented, as the bare owner is free to waive it for the beneficial owner.
Unless otherwise agreed with the bare owner, the usufructuary is responsible for the upkeep of the property. For example, the usufructuary will have to pay for boiler maintenance, redecoration, repainting and property tax.
Wealth tax and property dismemberment
Wealth tax (ISF) is a tax based on the size of the taxpayer's assets. At first glance, a dismemberment could easily be used to reduce the value of the taxpayer's assets, thereby reducing or even avoiding ISF tax.
However, article 885 G of the General Tax Code states that property or rights subject to a usufruct, a right of habitation or a right of use granted on a personal basis are included in the assets of the usufructuary or the holder of the right for their full ownership value. However, the assets subject to the usufruct or the right of use or habitation are included respectively in the assets of the usufructuary or the bare owner in the proportions set by article 669 in the cases listed below, and on condition, in the case of the usufruct, that the right constituted is neither sold nor transferred free of charge by its holder:
a. When the creation of the usufruct results from the application of articles 767 , 1094 or 1098 of the Civil Code . Property whose ownership is divided in application of other provisions, and in particular article 1094-1 of the Civil Code, cannot be subject to this apportioned taxation.
b. When the dismemberment of ownership results from the sale of a property of which the vendor has reserved the usufruct, right of use or right of habitation and the purchaser is not one of the persons referred to in article 751 ;
c. When the usufruct or the right of use or habitation has been reserved by the donor of a property which has been the subject of a gift or bequest to the State, the départements, the communes or associations of communes and their public establishments, national public administrative establishments and associations recognised as being of public utility.