Disclaimer: This article is for general information only and does not constitute legal, tax, or financial advice. Always consult a qualified French notaire, avocat, or chartered accountant before acting on anything you read here. The English Investor accepts no liability for decisions taken on the basis of this article.
Imagine an unmarried British couple who bought a small flat in Nice together in 2018. Their notaire — recommended by the local estate agent — drafted them a small SCI to hold the property and, helpfully, inserted a clause de tontine in the statutes so that whichever of them died last would automatically take the other’s shares without paying French inheritance tax. They both signed without really reading it; it had been described as “the standard arrangement for couples like you”. Eight years passed. Then, last summer, one of them died. The survivor went back to the notaire to update the SCI’s records. The notaire frowned, looked at the statutes, and asked an awkward question: “Avez-vous d’autres associés?” They never had any. The tontine clause covered all the shares. According to the Cour de Cassation’s 9 April 2026 ruling, that SCI was null from the moment it was set up. The flat was back in indivision between the surviving partner and the deceased’s elderly parents in Manchester — people they had never met.
The ruling (Civ. 3e, 9 avril 2026, n° 25-12.992, FS-B, marked for publication at the Bulletin) is the first time the Cour de Cassation has been asked, in a clean fact-pattern, what happens when a tontine clause inserted in an SCI’s statutes covers all the company’s shares. The answer is unsparing: the clause is illegal under article 1832 of the Code civil, and the consequence of that illegality is not merely that the clause is treated as unwritten — it is that the SCI itself is null from inception. The reasoning is technical but the practical implication is enormous, particularly for the cross-border fact-pattern this blog cares about most: unmarried British couples who hold a French property through a small two-person SCI with a tontine clause in the statutes. If the SCI as a vehicle is unfamiliar territory, our guide to creating a société civile walks through the basics, our guide to owning shares in an SCI covers the share-mechanics this article relies on, and our guide to changing SCI statutes is the one to pull up when you decide to fix an at-risk tontine clause. For the broader map of recent French Cour de Cassation rulings affecting British buyers, our copropriété AGM contestation article covers the 16 April 2026 ruling on AGM deadlines, our notarial-deed rectification article covers the sister 16 April 2026 ruling on deed errors, and our complete buying guide covers the wider question of how to set up the purchase in the first place.
What a tontine clause does — and why people put one in an SCI
The clause de tontine (also called a clause d’accroissement) is a contractual provision under which, when several people acquire something together, the survivor is deemed to have been the sole owner of the thing from the very beginning. The mechanism is centuries old — said to have been invented in the 1650s by an Italian financier called Lorenzo Tonti — but its modern French use sits in a fairly narrow corner of inheritance planning: couples who are not married, not in a PACS, and who want one of them to inherit the other’s property without paying France’s brutal 60% inheritance tax that applies between unrelated persons.
The fiscal logic is straightforward. If you put the tontine clause directly on a property — say, a flat purchased jointly by two unmarried partners — the death of one of them triggers droits de mutation par décès at the rate applicable between unrelated persons, which is 60% of the property’s value. That is fiscally catastrophic. So French notarial practice developed a workaround: instead of buying the property directly, the couple sets up a small SCI which then acquires the property, and the tontine clause is inserted in the SCI statutes to cover the company’s shares rather than the property itself. On death, the survivor takes the deceased’s shares; because the SCI is à prépondérance immobilière, the share transfer is taxed at the much gentler 5% mutation rate rather than the 60% inheritance rate. Same economic outcome, vastly better tax bill.
The mechanism works — has worked, for decades — but it has always sat on a knife-edge. The problem is what happens to an SCI whose entire share capital is covered by a tontine. A tontine clause has two defining features. The first is that it is aleatory — the bet must be balanced; both parties must have similar life expectancies and similar economic stakes, otherwise the operation can be requalified as a disguised gift (donation indirecte), with all the gift-tax consequences that come with that requalification. The second feature is the one that does the damage in the 9 April 2026 ruling: a tontine clause is retroactive. The survivor is not just deemed to inherit the deceased’s shares on death; the survivor is deemed to have always been the sole owner of those shares, going back to the SCI’s creation.
What the 9 April 2026 ruling decided
Two unmarried partners had set up an SCI together. They were the only two associates, and the statutes contained a tontine clause covering all the shares. They later separated and one of them sued, asking the court (i) to dissolve the SCI early on the grounds of juste motif, and (ii) to declare the tontine clause “réputée non écrite” — i.e. unwritten and of no effect. The Court of Appeal had refused both demands, holding the clause valid by analogy with the rule in article 1844-5 of the Code civil (which allows an SCI whose shares end up in a single hand to continue for a one-year cure period before any interested party can request its dissolution).
The Cour de Cassation rejected the cassation appeal — but on a completely different and far more drastic basis than the Court of Appeal. The clause is not valid, the third civil chamber said. It is illegal, because it violates article 1832 of the Code civil, which requires that an SCI be constituted by two or more associates. Here is where the retroactivity bites: because a tontine clause is retroactive, an SCI whose entire share capital is covered by it is, in legal effect, treated as having had a single shareholder from inception — even while the two associates are alive. The SCI is plurally-held only in appearance. In reality, by virtue of the legal fiction of retroactivity, it has always been single-shareholder. And a single-shareholder SCI is not an SCI at all — it is a contractual nullity.
Article 1844-5, the court added, doesn’t save it. That provision assumes a validly-constituted SCI that later becomes single-shareholder; it gives a one-year cure period before forced dissolution. But here, because of the retroactive effect of the tontine, the SCI was never validly constituted with two associates in the first place. There is nothing for article 1844-5 to operate on. The clause itself is therefore illegal under article 1832, and the appropriate sanction — under article 1844-10 alinéa 1 of the Code civil — is the nullity of the whole SCI, not merely the invalidation of the clause.
The case-specific facts pre-dated the 12 March 2025 ordonnance n° 2025-229, which re-wrote the régime of company nullity, but the commentator confirms — and we agree — that the reasoning carries over into current law. The new article 1844-10 alinéa 1 explicitly says that the nullity of an SCI may result from “violation of provisions fixing a minimum number of two associates”, which is the rule the 9 April 2026 ruling enforces. So the holding is not a one-off historical curiosity — it is the leading authority on this question going forward, and it will be cited against any tontine-on-all-shares SCI tested in court from now on.
Why this matters for British couples buying through an SCI
The architecture of the trap is uniquely cruel for cross-border buyers. Many unmarried British couples who buy in France together end up using an SCI — because the SCI is the standard French structure for two-person property holding, because it gives them a measure of inheritance flexibility that direct ownership doesn’t, and because their notaire suggests it. The tontine clause is then sometimes added on top, sometimes by the notaire’s own initiative, sometimes after a brief explanation that “this protects the survivor”. In our experience, very few British clients understand at the time of signing that a tontine clause covering all the shares carries this structural risk. They sign, they pay, the SCI is registered, the property purchase completes, and the file goes in a drawer. Years later, when one of them dies, the trap springs.
The downstream consequences are severe. Once an SCI is declared null, article 1844-15 of the Code civil (in its post-2025 form) provides that the nullity ends the contract going forward, without retroactivity for past transactions, but produces the effects of a judicial dissolution. In practice, the SCI’s only asset — typically the property itself — is unwound from the company and reverts to indivision among those who would have been associates absent the tontine. For unmarried British couples without a will, the result is brutal: the surviving partner ends up co-owning the property with the deceased’s heirs under French succession rules, which (absent a will or marriage) can mean the deceased’s parents, siblings, or even more distant relatives. The whole point of the tontine — to keep the property in the survivor’s hands without inheritance tax — is defeated, and worse, the survivor is forced into an indivision they cannot easily exit. Our French inheritance law guide sets out the default rules that apply in this scenario in more detail.
For PACSed or married couples, the exposure is much lower. The surviving spouse or PACSed partner already enjoys substantial inheritance protections under French law (full exemption from inheritance tax for the surviving spouse; reserved share rights; option to take the property in usufruit and the children in nue-propriété). The tontine clause is, for them, a less commonly used and less necessary tool. The 9 April 2026 ruling is a problem chiefly for those couples for whom the tontine was meant to do the heavy lifting — i.e. unmarried, non-PACSed couples — which, in our reading of who buys property in France from the UK, is a meaningful slice of the audience.
How to draft a tontine clause that survives the 2026 ruling
The Dalloz commentary (Reygrobellet, 5 May 2026) confirms the existing notarial wisdom: the fix is to keep at least one share per associate outside the tontine. If each concubin is the legal owner of one share that is not subject to the tontine clause, the SCI keeps two distinct associates throughout — both during life and, retroactively, from inception. The two outside-tontine shares anchor the company’s plural-shareholder structure. The bulk of the share capital can still be covered by the tontine, and the tax-efficient outcome on death is preserved (the survivor takes the tontine-covered shares at the 5% mutation rate; the outside-tontine share of the deceased passes by ordinary inheritance to the deceased’s heirs, including the surviving partner if there’s a will).
An alternative, increasingly used by sophisticated French notaires, is the démembrement croisé. Here, the tontine clause is restricted to the usufruit (life interest) of the shares, while the nue-propriété (bare ownership) is held outside the tontine — typically by the children of the deceased, or by the survivor in their own right. The architecture is more complex but extremely flexible: it preserves the survivor’s economic enjoyment of the property for life, while letting the bare ownership pass cleanly through the inheritance route. It is well-suited to couples who have children from earlier relationships and who want to thread the needle between protecting the survivor and not disinheriting their children.
A third option, less frequently used but worth considering for the right fact-pattern, is to use a SARL or SAS instead of an SCI as the property-holding vehicle. The Cour de Cassation’s reasoning in the 9 April 2026 ruling is anchored on article 1832 of the Code civil — the general civil-society rule requiring two associates. A SARL or SAS can have a single shareholder by design (it’s called a EURL or SASU, respectively), so the retroactivity-induced single-shareholder problem doesn’t arise in the same way. But — and this is a big but — the fiscal treatment of the property differs. SARLs and SASs holding French property are typically taxed at the corporate level (impôt sur les sociétés), which may or may not be advantageous depending on rental income, depreciation strategies, and your overall wealth structure. For a furnished-rental fact-pattern, our LMNP guide discusses the alternative status that some British buyers prefer to a société-civile holding altogether. We would not recommend switching from SCI to SARL/SAS purely to side-step the tontine issue without a full fiscal review by a French chartered accountant.
Where this fits in the wider French SCI / property timetable
For a British investor running a small French SCI, several recent French Cour de Cassation rulings affect the architecture of the standard setup. The table below sets out the main tontine-clause configurations in an SCI, their validity in the post-9 April 2026 environment, and their fiscal treatment on the death of an associate.
| Tontine clause configuration | Validity (post-9 April 2026) | Fiscal treatment on death of one associate |
|---|---|---|
| Tontine on ALL shares of a 2-associate SCI | SCI null from inception. Civ. 3e, 9 avril 2026, n° 25-12.992. | Tontine void. Property reverts to indivision between surviving partner and the deceased’s heirs. |
| Tontine on most shares + at least one share per associate outside | Valid (the pre-existing notarial fix, confirmed by the 2026 ruling) | Survivor takes the tontine-covered shares at the 5% mutation rate. The outside-tontine share passes by ordinary inheritance. |
| Tontine on usufruit only (démembrement croisé) | Valid (more flexible, increasingly used) | Survivor receives life interest in the tontine-covered shares at low mutation rate; nue-propriété passes by inheritance. |
| Tontine directly on the property (no SCI) | Valid (no SCI, no article 1832 issue) | Worst-case fiscally for unmarried partners: 60% inheritance tax on the deceased’s share. |
| No tontine — standard inheritance via SCI | Valid | French succession rules apply. Surviving partner inherits only with a will / PACS / marriage. |
What the table makes visible is that the 9 April 2026 ruling does not kill the SCI-plus-tontine strategy. It only kills the lazy version — the version where the tontine is dropped onto all the shares without keeping any anchoring share outside. The properly-drafted version, with one share per associate held outside the tontine, remains entirely viable and tax-efficient. The fix is small. The cost of the fix — a notaire’s review and an amendment to the SCI statutes — is far below the cost of having the SCI declared null at the worst possible moment.
What if your existing SCI already has a tontine on all shares
If you set up your French SCI five or ten years ago and you suspect — or know — that your statutes contain a tontine clause covering all the shares, the right move is to act now, while both associates are alive. Pull out the SCI statutes. The tontine clause is usually an article in the body of the statutes labelled Clause de tontine, Clause d’accroissement, or Pacte tontinier. Look at how the clause defines the assets it covers. If it says it applies to “l’intégralité des parts sociales” or “toutes les parts” or any equivalent phrasing without carve-outs, you have the at-risk configuration.
The fix is a statutes amendment: an extraordinary general meeting of the SCI, voted unanimously by both associates, modifying the tontine clause to exclude at least one share per associate. The modified statutes are then filed with the greffe of the relevant tribunal de commerce, and the SCI’s K-bis updates. Our complete guide to changing SCI statutes walks through the procedure step by step. The whole exercise typically costs a few hundred euros in notaire fees plus the greffe filing. It is the cheapest insurance available in French property law.
One important point on timing. The Dalloz commentary argues that the prescription for a nullity action under article 1844-14 of the Code civil — two years from the day the nullity is “encourue” — only starts to run from the day the tontine clause takes effect, i.e. the day one of the associates dies. That means a surviving partner whose SCI has a tontine-on-all-shares clause has a two-year window from the date of the death to act, after which the nullity defence becomes prescribed. But the same window applies to creditors of the deceased, the deceased’s heirs, and any other interested party who might want to assert the nullity for their own reasons. Two years is short. Better to fix the statutes now, before death, than to gamble on the prescription clock running faster than the people who would benefit from the nullity.
The fiscal-requalification trap, separately
One more trap, separate from the nullity issue but relevant for British couples who use this structure: even a properly-drafted tontine clause can be requalified by the French tax authority as a donation indirecte (a disguised gift) if the bet underlying the tontine is unbalanced. This is established case law going back at least to Civ. 1re, 10 mai 2007, n° 05-21.011, where one associate had financed the entire SCI alone and there was a significant age gap between the two associates, accentuated by the older one’s poor health. The tax authority requalified the tontine as a gift from the wealthy older associate to the younger one, with full gift-tax consequences and penalties.
For a British couple, this matters in two cases. First, where one partner is significantly older than the other (as in the 2007 case). Second, where one partner contributes substantially more capital to the SCI than the other — which is common for British couples where one partner is the one with the savings and the other contributes income to running costs. In either configuration, the fiscal authority can argue the tontine wasn’t a genuine aleatory bet but a mechanism to transfer value tax-free from one to the other. The defence is to make the contributions broadly equal — either via the initial capital subscription or through a documented loan from one to the other — and to be ready to demonstrate, on audit, that both partners had similar life expectancies at the time the SCI was set up. Neither half of that defence is trivial.
Frequently asked questions
What is a tontine clause in a French SCI?
A tontine clause (sometimes called a clause d’accroissement) is a provision in the SCI’s statutes under which, on the death of one of the associates, the surviving associate is deemed to have always been the sole owner of the deceased’s shares — going back to the SCI’s creation. It is used by unmarried couples in France to transfer SCI shares between partners on death at a much lower fiscal cost (5% mutation tax on the share value) than the 60% inheritance tax that would apply between unrelated persons.
Can I have a tontine clause that covers all the shares of my SCI?
No — at least not without exposing the SCI to nullity. The Cour de Cassation’s 9 April 2026 ruling (n° 25-12.992) holds that a tontine clause covering all the shares of a two-associate SCI makes the SCI null from inception, because the retroactive effect of the tontine means the company is deemed to have had a single shareholder all along, in violation of article 1832 of the Code civil. The fix is to keep at least one share per associate outside the tontine.
What’s the safe way to structure a tontine clause in an SCI?
The standard French notarial solution, confirmed by the 9 April 2026 ruling, is to keep at least one share per associate outside the tontine. Each associate then holds one “anchoring” share that is not subject to the tontine clause, plus their tontine-covered shares. The SCI remains validly two-associate at all times — both during life and, retroactively, from inception. The bulk of the share capital can still benefit from the tontine on death.
What happens to the property if my SCI is declared null?
Under article 1844-15 of the Code civil, the nullity ends the SCI without retroactivity for past transactions but produces the effects of a judicial dissolution. The SCI’s main asset — typically the property — is unwound from the company and reverts to indivision among those who would have held the shares absent the tontine. For unmarried British couples without a will, the surviving partner ends up co-owning the property with the deceased’s French-law heirs (parents, siblings, or more distant relatives), defeating the entire point of the original setup.
How long do I have to challenge or be exposed to a tontine-clause nullity?
Article 1844-14 of the Code civil sets a two-year prescription period for company nullity actions, running from the day the nullity is “encourue”. The Dalloz commentator argues that the nullity is only incurred when the tontine clause takes effect — i.e. from the day one of the associates dies. That means the two-year clock starts from death. Two years is short, and applies to all interested parties (the surviving partner, creditors, heirs). The prudent approach is to fix the SCI statutes before death, not after.
Does this affect married or PACSed couples?
The 9 April 2026 ruling concerns concubins (unmarried, non-PACSed partners) but the legal rule applies to any SCI with only two associates regardless of their marital status. That said, married couples and PACSed partners already enjoy substantial inheritance protections under French law (full exemption from inheritance tax for the surviving spouse; reserved share rights; the option of usufruit on the property). The tontine clause is correspondingly less common among them. The practical exposure to the 2026 ruling is highest for unmarried British couples without a PACS.
Should I switch from an SCI to a SARL or SAS to avoid this issue?
The Dalloz commentary suggests SARL or SAS as alternatives — neither structure has the article 1832 “two associates” requirement that the 9 April 2026 ruling enforces against the SCI. But the fiscal treatment of property held in a SARL/SAS differs from an SCI’s transparency, and switching structures means re-examining your whole tax setup with a French chartered accountant. We would not recommend switching purely to side-step the tontine issue. The simpler fix — keeping one share per associate outside the tontine — preserves all the SCI’s fiscal advantages.
What if the tontine clause was drafted to cover all shares and one of us has already died?
This is the worst-case scenario the 9 April 2026 ruling addresses. The surviving partner has a two-year window from the date of death to act on the nullity (article 1844-14). The right move is to consult a French notaire and avocat immediately. Depending on the facts, options can include negotiating with the deceased’s heirs for a buy-out, arguing for a more favourable interpretation of the statutes, or — if a will or other inheritance instrument exists — invoking it alongside the tontine to achieve the originally intended outcome. None of these is straightforward; all of them require professional French advice. But two years is enough time to reach a settlement if you start now.
Could the tontine clause be requalified as a gift even if it’s properly drafted?
Yes. Even a properly-drafted tontine clause (with shares held outside the tontine to preserve SCI validity) can be requalified as a donation indirecte by the French tax authority if the bet underlying the tontine is unbalanced — typically because one associate is significantly older or in worse health, or because one associate contributed substantially more capital. The leading case is Civ. 1re, 10 mai 2007, n° 05-21.011. The defence is to ensure the two associates’ contributions and life expectancies are broadly equivalent, and to document this carefully at the time of the SCI’s creation.
