The five advantages of a bare ownership sale.

Why should you consider selling the bare ownership of your property?

The bare ownership sale of a property is a transaction that allows an owner to transfer ownership of the roof and four walls (the entire structure of the building, excluding fixtures and fittings) of the property to a buyer while retaining the usufruct of the property for a given period. This solution can have several benefits for property owners, depending on their needs and goals.

Receive the capital immediately

One of the advantages of a bare ownership sale is that the bare owner can receive a sum of money immediately while keeping the right to use the property for a given period. This capital can be as much as six times the amount of the lump sum payment for a traditional life annuity. This solution can be useful to finance personal plans, to improve the seller’s financial situation, to build up savings and even to make a gift.

A bare ownership sale allows the seller to continue to live in the home and to receive rent

A bare ownership sale can also be a solution for property owners who wish to continue to live in their main residence or to enjoy their second home. In addition to receiving a large sum of money from the sale of the bare ownership of the property, the seller retains a right of use and habitation, either to stay in the property during vacations or to rent it out: the seller can receive the rentsand thus have a source of additional income.

You are no longer responsible for major renovation work on the property

Selling bare ownership to an investor also frees you having to pay for major renovation work. In fact, according to Article 606 of the French Civil Code, any major renovation work is the responsibility of the person who buys the bare ownership.

The tax advantages of bare ownership

In a bare ownership sale of a primary residence, the capital received is paid out net of taxes. In the case of a second home, we invite you to contact your legal advisor.

In conclusion, the bare ownership sale offers many advantages for property owners, depending on their needs and goals. This solution can allow you to receive a large sum of money immediately, while retaining the usufruct of the property for a given period, to make gifts, to receive income from rent, and to continue to live in your primary or secondary residence.

What steps are involved in a bare ownership sale?

A bare ownership sale takes place in several steps.

1. The first step is to decide on the sale price of the bare ownership. This price is determined according to several criteria, such as the duration of the usufruct, the age of the bare owner and the full ownership value of the property. The sale price of the bare ownership is generally lower than the full ownership value of the property, because the buyer does not have the immediate use of the property and must wait for the end of the usufruct to dispose of it freely.
2. The second step is to find a buyer for the bare ownership. This can be done with the help of real estate professional or by using websites that specialize in bare ownership sales. Azur Real Estate already has the buyer, and has an institutional investment fund that will buy the bare ownership of your property. You will receive the full amount in a single payment within three months.
3. The third step is signing the deed of sale before a notary. This deed of sale specifies the conditions of the bare ownership sale, in particular the duration of the usufruct, the bare ownership sale price, the payment terms and the obligations of the parties. The buyer then becomes the bare owner of the property, but can only dispose of it freely after the usufruct expires.
4. The fourth step is that the buyer pays the notary fees and any taxes related to the bare ownership sale. These costs are generally lower than the costs of a full ownership sale, because the value of the bare ownership is lower than the full ownership value.
5. Finally, the last step is to wait until the end of the usufruct, when the bare owner can freely dispose of the property. Depending on the duration of the usufruct, this period can range from a few years to several decades.

What are the rules for selling bare ownership?

The bare ownership sale of a property is governed by specific legal rules, which must be respected in order to guarantee the validity of the sale and to protect the rights of the parties involved. Here are the main rules to follow when selling bare ownership:

• The seller must be the full owner of the property. The seller can sell only the bare ownership and retain the usufruct of the property.
• The sale must be concluded by notarial deed. The notarial deed must mention the nature of the sale, the rights and obligations of the seller and of the buyer, and the conditions of sale.
• The sale price must be determined based on the value of the bare ownership. The bare ownership value is calculated according to the age of the seller at the time of the sale, the duration of the usufruct and the value of the property.
• The buyer of the bare ownership can only take possession of the property upon the expiration of the usufruct. The buyer cannot use the property or receive the rents during the usufruct period.
• The seller must inform the buyer of the existence of any encumbrances on the property, such as easements or mortgages.
• The seller must inform the tenants of the property of the bare ownership sale and the change of ownership.
• In the event of a bare ownership sale of a property that is being rented out, the tenants must continue to comply with the obligations of the lease, such as performing minor maintenance work and returning the property in good condition at the end of the lease.

It is important to respect these rules in order to avoid any disputes between the parties and to guarantee the validity of the bare ownership sale.

When should you consider a bare ownership sale rather than a life annuity sale?

A bare ownership sale allows the owner to sell a property while continuing to enjoy it (living in it, renting it out, etc.) until his/her death. This differs from a life annuity, which involves the payment of a life annuity in addition to the sale price, but which prohibits renting out the property. In many situations, a bare ownership sale is more advantageous than a life annuity sale.

The capital is received immediately

As opposed to a life annuity sale, which consists of a lump sum payment and a taxable life annuity, a bare ownership sale is offers advantages to sellers who need a large sum of money immediately while also retaining the option to live in the property or to rent it out. This single payment, which can be as much as six times the amount of the lump sum payment for a classic life annuity, allows sellers to improve their standard of living and to finance their future plans.

Funds for making a gift

For example, a bare ownership sale is an ideal solution for property owners who wish to make a gift to their children and who want to avoid the transfer costs at the time of inheritance.

According to the law, as part of a bare ownership sale, each parent can give up to €100,000 per child, tax-free. For example, a couple can pass on €200,000 to each of their children, tax-free. This €100,000 allowance can be applied in one or more installments every 15 years.

The option to rent out the property

Whether a primary residence or a second home, a bare ownership sale is a good solution for people who want to rent out their homes. Unlike a traditional life annuity, a home whose bare ownership has been sold can be rented out.

Peace of mind in the event of major renovation work in the future

In a bare ownership sale, the bare owner is responsible for taking care of the major renovation work on the sold property. These major works are defined in Article 606 of the French Civil Code.

Life annuity sale vs
Bare ownership sale with Azur Real Estate

What are the advantages of a bare ownership sale?

Selling the bare ownership of a property offers many advantages:

• A bare ownership sale allows you to receive the proceeds of the sale immediately. The seller receives the amount of the bare ownership sale, but retains the usufruct of the property until the end of the usufruct. This can be useful for financing your personal plans or for improving your financial situation.
• The capital paid out in a bare ownership sale of a primary residence is net of taxes.
• Bare ownership can help prepare for the transfer of financial assets. By selling the bare ownership, sellers can pass on a capital sum to their heirs while retaining the usufruct of the property until their death (see the article on gifts at: impots.gouv.fr).
• By retaining the usufruct, the seller can continue to live in the property, or receive rental income, which can be a source of additional retirement income.

In conclusion, selling the bare ownership of a property can offer many advantagessuch as receiving a large amount of capital (the amount of the bare ownership sale) within three months, the option of enjoying the property by living in it or renting it out (in the case of a second home), and finally being able to pass on a sum of money to your heirs.