Are you living as a couple, in a civil partnership (PACS) or simply cohabiting, and planning to buy a property together? Unlike married couples, you are not automatically protected by a matrimonial property regime, which significantly changes how you should secure your purchase.
There are three main options for organising ownership of the property: standard joint ownership (indivision), an SCI between unmarried partners, or a tontine clause included in the purchase deed.
This article explains how each option works, what happens in the event of separation or death, and how to choose the solution best suited to your situation when buying property together without being married.
In summary
- Without marriage, no legal matrimonial regime automatically protects the couple: cohabiting and PACS partners must organise ownership of the property themselves.
- Joint ownership (indivision) is the default arrangement: each person owns a share based on their financial contribution, and this share should be specified in the notarised deed.
- An SCI offers greater flexibility through its articles of association when planning for separation or death, but involves more formal management requirements, including meetings and accounting.
- A tontine clause automatically transfers full ownership of the property to the surviving partner outside the estate, subject to certain tax thresholds.
- The most appropriate option depends on the length and stability of the relationship, each partner's financial contribution and whether either partner has children from a previous relationship.
- Drawing up a joint ownership agreement at the time of purchase can help prevent most disputes and deadlocks later on
Cohabitation, PACS or Marriage: Why Your Relationship Status Matters
When a married couple buys a property, their matrimonial property regime—whether community of property or separation of property—automatically determines each spouse's rights and provides protection for the surviving spouse.
No equivalent automatic protection exists for unmarried couples, while a PACS provides only partial protection. Unless the partners choose joint ownership when entering into their PACS, they are generally subject to a separation of property regime, without the automatic inheritance rights granted to a spouse.
In practical terms, if you buy property together without being married and do not make specific legal arrangements in advance, the standard rules of joint ownership will apply by default. Although this arrangement is relatively straightforward, it has limitations when it comes to protecting the surviving partner.
For this reason, the question of how the property will be held—through joint ownership, an SCI or a tontine clause—should be addressed before signing the purchase deed, rather than after a separation or death.
Joint Ownership: The Default Arrangement When Buying Together Without Being Married
Each Partner Owns a Share Based on Their Financial Contribution
Unless a specific legal structure is put in place, buying a property together as an unmarried couple results in joint ownership. Each buyer owns a share of the property, generally in proportion to their financial contribution, including their personal deposit and their share of the mortgage repayments.
These ownership shares must be clearly specified in the notarised deed, for example 60%/40% or 70%/30%. Otherwise, ownership may be presumed to be divided equally between the two buyers, even if their actual financial contributions differ.
For example, if one partner contributes €90,000 towards a €300,000 property purchase and the other contributes €30,000, with the remaining €180,000 financed through a joint mortgage repaid equally by both partners, the ownership shares stated in the deed should reflect this financial reality.
Failing to do so could create a significant imbalance if the property is later sold or the couple separates.
Why a Joint Ownership Agreement Is Essential
Standard joint ownership, where no specific agreement has been drawn up, is governed by relatively strict management rules.
Major decisions generally require the agreement of both co-owners, and either party can, in principle, request the division of the jointly owned property at any time.
For cohabiting couples or PACS partners buying property together, this uncertainty can become a significant issue if the relationship deteriorates.
Drawing up a joint ownership agreement (convention d'indivision), potentially for a fixed period of up to five years and renewable thereafter, makes it possible to determine in advance:
- how expenses will be divided;
- how the property will be managed on a day-to-day basis;
- how one co-owner can leave the arrangement;
- how one partner can buy out the other's share;
- whether one partner has priority when buying the other's share;
- what procedure should apply in the event of a disagreement.
This is particularly useful if you are considering buying a property in joint ownership with friends or family, as the mechanisms involved are similar to those that apply to an unmarried couple.
An SCI Between Unmarried Partners: A More Flexible Structure for Planning Ahead
Tailor-Made Articles of Association Rather Than Rigid Legal Rules
A Société Civile Immobilière (SCI), or French property-holding company, can be an attractive alternative for unmarried couples seeking greater flexibility than standard joint ownership.
Instead of owning the property directly, both partners own shares in the SCI, which itself owns the property. Its tailor-made articles of association can determine how the company is managed, including the appointment of managers, decision-making procedures and the majority required to sell the property.
This structure can therefore avoid the unanimity requirement that often applies under joint ownership.
The flexibility of an SCI also makes it possible to plan ahead for a potential separation. For example, the articles of association can include a pre-emption clause giving the remaining partner priority to purchase the other's shares, as well as specific rules for valuing those shares in the event of a buyout.
It can also make it easier for one partner to join or leave the ownership structure without having to go through a standard property sale, which may reduce certain costs.
Planning for Death and Protecting Children from a Previous Relationship
An SCI can also be particularly useful when one partner has children from a previous relationship.
The articles of association can provide for cross-ownership arrangements involving usufruct and bare ownership. This can allow the surviving partner to continue living in the property while preserving the heirs' rights to the bare ownership.
This offers a more nuanced solution than a straightforward tontine clause, as it allows the surviving partner to be protected without completely excluding children from the inheritance.
In return for this flexibility, an SCI involves certain administrative and management requirements, including holding meetings, maintaining at least basic accounts and, depending on the chosen tax regime, filing accounts.
These obligations should be anticipated from the outset, ideally with the assistance of a notary or specialist advisor.
The Tontine Clause: Automatically Protecting the Surviving Partner
How a Tontine Clause Works
A tontine clause, also known as a pacte tontinier, is included directly in the property purchase deed.
It provides that, when one of the two buyers dies, the surviving buyer is retroactively considered to have been the sole owner of the entire property from the date of purchase.
From a legal perspective, the property therefore never forms part of the deceased partner's estate. As a result, the deceased's heirs—including children from a previous relationship—cannot, in principle, claim any rights over the property.
This makes the tontine clause a powerful way of protecting the surviving partner, particularly for unmarried couples without children together who wish to protect one another without getting married.
However, it has one major disadvantage: the clause is generally automatic and rigid, making it poorly suited to situations where the couple separates before either partner dies. In principle, both parties must agree to terminate the arrangement.
Tax Thresholds to Consider Before Choosing a Tontine Clause
From a tax perspective, transferring the property to the surviving partner through a tontine clause is generally subject to transfer duties on gifts or inheritances, calculated according to the legal relationship between the two buyers.
For unmarried partners who are not in a PACS, this can result in significant taxation where no allowance or exemption applies.
However, preferential tax treatment may apply when the property is the couple's principal residence and its value remains below a certain threshold—generally around €76,000, although this threshold may change. In such cases, partial relief from transfer duties may apply.
Above this threshold, taxation can be similar to that applying to an inheritance between unrelated individuals and can therefore be considerably higher.
Before choosing a tontine clause, it is therefore essential to calculate the potential tax cost according to:
- the value of the property;
- whether the couple is in a PACS or simply cohabiting;
- the applicable tax thresholds and exemptions.
PACS partners benefit from an inheritance tax exemption, which may also apply to a tontine arrangement under certain conditions.
These issues are closely related to the tax treatment of jointly owned property, which is worth comparing before making a final decision.
Joint Ownership, SCI or Tontine: How to Choose the Right Option for Your Situation
Choosing between these three options rarely depends on a single factor. Several elements should guide your decision when buying property together without being married:
- The length and stability of your relationship: for a relatively new couple or one whose long-term future remains uncertain, joint ownership with a joint ownership agreement is often the simplest and most flexible solution.
- Each partner's financial contribution: if the contributions differ significantly, joint ownership with clearly defined shares or an SCI with an appropriate distribution of company shares can accurately reflect each partner's investment. A tontine clause, on the other hand, transfers the entire property to the surviving partner regardless of the original contributions.
- Children from previous relationships: because a tontine clause can exclude the deceased partner's heirs from rights over the property, it may be considered unfair to children from a previous relationship. An SCI with cross-ownership arrangements can provide a more balanced compromise.
- Long-term wealth and investment plans: couples planning to make other investments together, such as rental property or gradually transferring assets to their heirs, may find that an SCI provides a more suitable framework than standard joint ownership.
- The budget available for the legal structure: setting up and managing an SCI involves incorporation costs and ongoing annual expenses, whereas joint ownership and a tontine clause are generally limited to the notarial costs associated with the property purchase.
In all cases, consulting a notary before signing the purchase deed is strongly recommended to ensure that the chosen structure is appropriate.
You can also rely on Optimhome's services for buyers to help you connect with the right professionals from the very beginning of your property search.
Separation or Death: What Changes Depending on the Option Chosen?
In the event of a separation, the consequences vary significantly depending on the ownership structure.
Under joint ownership, either partner can request the division of the property. One partner can buy out the other's share, or the property can be sold and the proceeds divided according to their respective ownership shares.
Without a joint ownership agreement, this process can become lengthy and contentious, particularly when co-owners disagree over the sale of a jointly owned property, including disagreements over the price, timing or choice of buyer.
With an SCI, one partner generally leaves by transferring their company shares. This process is often governed by a pre-emption clause included in the articles of association, helping to reduce the risk of deadlock.
A tontine clause, however, is not designed for separation. It can only be terminated with the agreement of both partners, which may create a deadlock if one party refuses.
What Happens in the Event of Death?
The differences between the three arrangements become even more significant when one partner dies.
Under standard joint ownership, the deceased partner's share becomes part of their estate and passes to their legal heirs, such as their children or parents. The surviving partner may therefore find themselves jointly owning the property with the deceased's heirs, which can create difficulties if relations are strained.
With an SCI, the deceased partner's company shares are also subject to inheritance rules unless specific provisions have been made, such as cross-ownership arrangements or approval clauses in the articles of association.
With a tontine clause, by contrast, the surviving partner automatically becomes the sole owner of the property. The deceased partner's heirs cannot claim a share of the property, subject to the tax rules and thresholds outlined above.
Before considering a resale, regardless of the ownership structure chosen, it is advisable to obtain an online property valuation. This provides an objective basis for discussions between the parties, particularly when one partner wishes to buy out the other's share.
Work with an Optimhome Real Estate Advisor to Secure Your Property Purchase as a Couple
Structuring a property purchase between cohabiting or PACS partners involves more than simply choosing between joint ownership, an SCI or a tontine clause. It also means negotiating the purchase price effectively, comparing financing options and securing every stage of the transaction.
A local Optimhome real estate advisor can support you from the very beginning of your property search, working alongside the notary responsible for drafting the purchase deed and any agreement suited to your situation.
Whether you are still searching for a property or already negotiating a purchase, browsing the property listings offered by Optimhome advisors can also help you compare properties available in your area before making a commitment and refine your budget according to the planned financial contribution of each buyer.
Conclusion
Buying property together without being married means compensating for the absence of a protective matrimonial property regime by putting the appropriate contractual arrangements in place.
To summarise:
- Joint ownership is the default arrangement. It is simple to set up but provides greater security when accompanied by a joint ownership agreement.
- An SCI offers greater flexibility through its articles of association and can be particularly useful for planning ahead for separation, death or the presence of children from a previous relationship.
- A tontine clause provides strong protection for the surviving partner by keeping the property outside the deceased's estate, but it is relatively inflexible in the event of separation and is subject to specific tax thresholds.
- The right choice depends on the length and stability of the relationship, each partner's respective financial contribution and their individual family circumstances.
- In all cases, seeking advice from a notary and a real estate professional remains the best way to avoid unexpected legal or financial difficulties.
Do not hesitate to seek professional advice to choose and implement the solution best suited to your relationship and property plans.
FAQ
Can You Change the Ownership Structure After the Purchase, for Example from Joint Ownership to an SCI ?
Yes. It is possible to transfer a property held in joint ownership to an SCI created at a later date.
However, this operation involves additional costs, including registration duties and notarial fees, and should therefore be carefully considered. It is generally simpler and less expensive to choose the appropriate ownership structure from the outset.
Is a Tontine Clause Valid Regardless of the Property's Purchase Price?
Yes. A tontine clause can be used regardless of the property's value. However, its tax advantages depend heavily on the value of the property and the exemption threshold applicable to the couple's principal residence.
Above this threshold, the tax burden for the surviving partner can become significant, particularly for unmarried partners who are not in a PACS.
Is a PACS Enough to Protect My Partner in the Event of My Death?
A PACS provides an inheritance tax exemption comparable to that available to married couples, but only if a will names the surviving PACS partner as an heir, since a PACS does not automatically grant inheritance rights.
Without a will, the surviving PACS partner does not legally inherit the property.
What Happens if One of the Two Unmarried Buyers Can No Longer Pay Their Share of the Mortgage?
Whether the property is held in joint ownership or through an SCI, the obligation to repay the bank depends on the terms of the mortgage agreement, particularly whether the co-borrowers are jointly liable for the debt.
This obligation is separate from the ownership shares held by each buyer. It is therefore essential to clarify this point with the lender before signing.
Does a Joint Ownership Agreement Have to Be Drawn Up by a Notary?
It is not always a legal requirement. However, involving a notary is strongly recommended when the agreement concerns real estate, as the agreement must then be formally published in order to be enforceable against third parties.
Using a notary also helps ensure that the provisions included in the agreement are legally robust.
Can a Joint Ownership Agreement and a Tontine Clause Be Combined?
No. These two mechanisms are legally incompatible when applied to the same property.
A tontine clause is based on the legal fiction that the surviving buyer has been the sole owner of the property retroactively from the date of purchase, whereas joint ownership is based on shared and divisible ownership.
You must therefore choose between the two according to your priorities.
How Does the Choice Between Joint Ownership, an SCI and a Tontine Clause Affect the Resale of the Property While Both Partners Are Alive?
With both joint ownership and an SCI, selling the property while both partners are alive generally requires their mutual agreement. The proceeds are then distributed according to their respective ownership shares or the company shares they hold.
A tontine clause does not prevent the partners from selling the property by mutual agreement while both are alive. However, until one of the partners dies and the clause takes effect, it does not alter the ownership distribution agreed between the two buyers.
Author :
Fabrice DOBROWOLSKI - Optimhome Network Development Director
Optimhome offers you personalized support for your real estate project. Benefit from all my advice, based on several years of experience, to ensure the success of your project.
