Usufruct and Sale: How to Share the Price between the Bare Owner and the Usufructuary?

You own a house in Saint-Estève with your sister. You hold the usufruct (the right to use the property and receive rent), she holds the bare ownership (the right to dispose of the property, but without enjoyment). One day, you decide to sell the house. The price is global: €200,000. But how do you split this sum between you and your sister? And if the buyer pays late, who gets the interest?

This seemingly ordinary question gave rise to litigation resolved by the Court of Cassation in a judgment of 3 July 1991 (No. 89-21.541). The answer is clear: each is entitled to a portion of the price corresponding to the comparative value of their right. And late payment interest follows the same rule: the usufructuary cannot pocket it all.

Whether you are an owner, tenant or property professional, understanding this decision will save you many headaches – and perhaps a lawsuit. Let's delve into the details.

The Facts: A Story That Happens Every Day

Imagine Mrs X, usufructuary of a flat in Perpignan, and Mr Y, bare owner. In 1985, they sell the property for a single price of 500,000 francs (about €76,000). The deed of sale does not specify the allocation of the price between the usufruct and the bare ownership. The buyer pays late, generating default interest (late payment penalties).

Mrs X believes that, as usufructuary, she is entitled to all the interest, because it compensates for the loss of enjoyment of the price. Mr Y, on the other hand, considers that the interest should be shared proportionally to the value of their respective rights. The dispute arises: who is right?

The court of first instance rules in favour of Mr Y. Mrs X appeals, but the Court of Appeal upholds the decision. She appeals to the Court of Cassation. In its judgment of 3 July 1991, the Court of Cassation dismisses her appeal and upholds the reasoning of the lower courts.

The twist? The Court recalls a simple but often overlooked principle: the sale of a split property does not terminate the usufruct; it transfers it to the price. In other words, the usufructuary is only entitled to the value of their usufruct in the price, not the whole amount. And late payment interest, being an accessory to the price, follows the same fate.

The Reasoning of the Court — Analysed

The Court of Cassation relies on Articles 578 et seq. of the Civil Code, which define usufruct. Usufruct is the right to enjoy property like the owner himself, but subject to preserving its substance. When the property is sold, the usufruct is transferred to the sale price. This is known as real subrogation: the price replaces the property in the estate of the usufructuary and the bare owner.

Consequently, if the property belongs in usufruct to one and in bare ownership to the other, each is entitled to a portion of the price corresponding to the comparative value of their right. How to assess this value? The Court does not provide a mathematical formula, but refers to the sovereign assessment of the lower courts. In practice, capitalisation tables based on the age of the usufructuary are used (the older the usufructuary, the less the usufruct is worth).

As for late payment interest, it is merely an accessory to the price. If the price is shared, the interest must be shared in the same proportions. The usufructuary cannot claim the whole amount, because that would amount to appropriating part of the capital belonging to the bare owner.

This judgment is neither a reversal nor a major development: it confirms a classic solution. But it has the merit of clarifying a point that is often a source of conflict: the fate of late payment interest.

What This Changes for You — Practically

If you own a split property (you are a usufructuary or bare owner), this decision directly concerns you. Here is what it implies:

• On sale: the notary must assess the value of the usufruct and the bare ownership on the day of sale, based on the age of the usufructuary. For example, for a usufructuary aged 60, the value of the usufruct is often estimated at 40% of the total price. If the property is sold for €200,000, the usufructuary will receive €80,000 and the bare owner €120,000.
• In case of late payment: default interest (often at the legal rate, currently around 4% per year) will be split in the same proportions. If the interest amounts to €5,000, the usufructuary will receive €2,000 and the bare owner €3,000.
• If you are a buyer: you must ensure that the seller specifies the allocation of the price between usufructuary and bare owner. This will prevent you from being caught in a conflict between them.

Let's take a concrete example in Saint-Cyprien: Mrs Martin, aged 70, usufructuary of a flat, sells it with her son (bare owner) for €150,000. The value of the usufruct is estimated at 30% (i.e. €45,000). The buyer pays one year late, generating €6,000 in interest. Mrs Martin will only receive 30% of the interest, i.e. €1,800. Her son will receive the rest.

If you are in this situation, you should have a descriptive statement of the usufruct drawn up and agree with the bare owner on a clear allocation in the deed of sale.

Four Tips to Avoid This Type of Dispute

• Have the value of the usufruct estimated before the sale: ask a notary or an accountant to use the tax scale (usufruct table) to determine each party's share. This avoids differing interpretations.
• Draw up a price allocation agreement: before signing the deed of sale, sign a document between usufructuary and bare owner specifying the respective shares and the fate of late payment interest. Have it approved by the notary.
• Include a clause in the deed of sale: expressly state that the price is allocated proportionally to the value of the usufruct and bare ownership, and that late payment interest follows the same allocation.
• Anticipate conflicts: if you disagree with the bare owner (or usufructuary), apply to the judicial court to have the allocation fixed. A clear judgment is better than a war of experts.

Further Reading: Related Case Law and Developments

This 1991 judgment is part of a consistent line of authority. The Court of Cassation had already ruled, in a judgment of 18 March 1986 (No. 84-15.680), that the usufructuary is only entitled to a portion of the price corresponding to the value of their usufruct. More recently, in a judgment of 10 October 2019 (No. 18-22.027), it recalled that the fruits of the price (interest) follow the fate of the capital.

The trend is therefore stable: no surprises. But watch out for legislative developments: the law of 23 June 2006 modified the regime of testamentary usufruct, without, however, overturning this principle. In practice, the courts continue to apply the rule of proportionality.

For the future, one can expect judges to be increasingly strict on the valuation of the usufruct, especially in the case of a sale at an undervalued price. If you sell at a price below market value, the usufructuary could challenge the allocation by claiming prejudice.

Key Points to Remember

1. Usufruct is transferred to the price. The sale does not terminate the usufruct, but transforms it into a right over the price.
2. The price is shared proportionally. Each receives a share corresponding to the value of their right (usufruct or bare ownership).
3. Late payment interest follows the same proportion. The usufructuary cannot claim it all.
4. Have the value of the usufruct estimated. Use the tax scale or call on an expert to avoid disputes.
5. Draw up a clear agreement. Before the sale, formalise the agreement between usufructuary and bare owner.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings – and often much more. Book an appointment →