An investor buys the bare ownership of an apartment in a managed residence. For fifteen years, they receive no rent, cannot occupy the property, and discover at the end of the term that the usufructuary has allowed it to deteriorate. The division of ownership, often presented as a wealth-building strategy, can create obstacles that sales brochures fail to mention.
Judicial termination of usufruct and co-ownership repairs: two underestimated legal risks
The standard allocation of expenses (routine maintenance for the usufructuary, major repairs for the bare owner) seems straightforward on paper. In practice, the boundaries between these two categories regularly lead to disputes.
In a ruling dated October 2, 2024 (No. 22-15.701), the Court of Cassation upheld the absolute termination of a usufruct due to serious neglect of maintenance. In practical terms, a negligent usufructuary can lose their right, allowing the bare owner to recover the property sooner, but in a deteriorated condition requiring extensive repairs.
More recently, on May 20, 2026 (No. 24-12.274), the Court of Cassation ruled that co-ownership existing alongside a division of ownership could give rise to compensation for preservation expenses.
This situation often arises in estates where several heirs hold the bare ownership jointly while a parent retains the usufruct. As Flash Immobilier’s explanation of the division of ownership details, situations combining co-ownership and usufruct create a tangle of rights that complicates any decision-making about the property.
No rental income and bank financing for the bare owner
The bare owner receives no income for the entire duration of the division of ownership. For an investor financing the purchase with a loan, this constraint directly affects monthly cash flow.
Banks are aware of this. The absence of rental income reduces borrowing capacity, since no rent is available to offset the monthly payments. The investor must therefore use savings or other income to repay a property they can neither live in nor rent out.
It is often said that the discount at purchase offsets the lack of returns. The purchase price of bare ownership is indeed lower than that of full ownership. The question is whether this discount truly makes up for the lost income over the entire term of the division of ownership, taking into account borrowing costs, inflation, and changes in the local market. The answer varies considerably depending on the property’s location and the term of the arrangement.
Expenses that remain the bare owner’s responsibility
Even without receiving rent, the bare owner is responsible for certain expenses:
- Major repairs as defined in Article 606 of the Civil Code (roofing, retaining walls, structural replacement), unless the division-of-ownership agreement provides otherwise
- Property tax in certain arrangements where the agreement explicitly provides for it, increasing the burden without any income in return
- Contributions toward repairs approved by the co-owners’ association when they qualify as major repairs, with no opportunity to object since voting rights at general meetings generally belong to the usufructuary
Resale restrictions and virtually no liquidity for divided ownership
Neither the bare owner nor the usufructuary can sell the property alone. Any sale of full ownership requires both parties’ consent. If the investor needs liquidity before the division of ownership ends, they face a very limited secondary market.
Selling the bare ownership alone is theoretically possible, but potential buyers are scarce. They demand an additional discount to take on a right stripped of use and income. A bare owner who sells before the end of the term generally accepts a loss compared with their purchase price.
IFI tax and inheritance: benefits that need qualification
The bare owner does not include the property in their IFI tax base, which is a real advantage for substantial estates. However, the usufructuary declares the full ownership value as part of their assets subject to IFI, which can represent a significant tax burden.
For inheritance planning, dividing ownership does indeed make it possible to transfer bare ownership at a lower tax cost, since gift tax is calculated on the value of the bare ownership, which is lower than that of full ownership. This mechanism works well as part of a planned family arrangement. It is less beneficial when the division of ownership results from a conventional rental investment in a managed residence, where the wealth-planning rationale is different.
Division-of-ownership agreement: the document too many investors overlook
Most disputes between bare owners and usufructuaries stem from an incomplete or missing division-of-ownership agreement. This notarized document sets out the precise allocation of expenses, maintenance requirements, each party’s obligations, and the terms for early termination.
Without a detailed agreement, Articles 605 and 606 of the Civil Code apply. Their wording leaves room for interpretation, which the courts resolve on a case-by-case basis. Having a precise agreement drafted costs a few hundred euros and can prevent years of litigation.
Key points to address in the agreement:
- An explicit list of the work each party is responsible for, going beyond the legal distinction between maintenance and major repairs
- A requirement for the usufructuary to provide regular property condition reports, with a termination clause in the event of obvious deterioration
- Terms for transferring the bare ownership or usufruct to a third party, including any reciprocal right of first refusal
- The allocation of co-ownership expenses and voting rights at general meetings
Divided ownership remains a useful tool in certain wealth-planning situations, particularly for planned family transfers with the usufruct retained. For investors seeking rental returns or liquidity, the combined constraints (no income, inability to resell, repair costs, and the risk of deterioration) weigh heavily against the purchase discount alone. The strength of the arrangement depends less on the legal mechanism itself than on the quality of the agreement governing it.
