A mother gives her son 350 000 francs, outside his inheritance share, and the same day he uses the sum to buy the bare ownership of a building whose usufruct his mother acquires. Thirty years later, the sister claims reduction (réduction, the cutting back of gifts that exceed the disposable portion). The Paris court of appeal adds the sum given, 53 357 €, to the pool, holding that the son acquired “not a property but a right in rem” and that no direct link is established between the gift and the purchase. The Cour de cassation (the French supreme court for civil matters), on 17 October 2019, in a reported decision, quashed: the sum having been used to acquire the bare ownership, “it is the value of that property at the date of the opening of the estate, according to its condition at the time of its acquisition, which had to be notionally added to the calculation pool”. This is the substitution rule of article 922: it is not the money that is added back, but what it became. For the valuer, a valuation at the date of death of a split right acquired decades earlier.
The facts
By deed of 24 May 1982, a woman gives her son, outside his inheritance share and with exemption from rapport, a sum of 350 000 francs. By deed of the same day, the son buys the bare ownership of a property whose usufruct his mother acquires, for a total price of 500 000 francs. The donor dies, leaving her two children and a will bequeathing to her grandson the disposable portion and company shares. The daughter sues her brother and her nephew for partition and reduction of excessive gifts.
The Paris court of appeal, on 26 June 2018, holds that the 1982 gift, “fixed at the sum of 350 000 francs, or 53 357.16 euros, is reducible to the disposable portion within that limit”: the son “acquired not a property but a right in rem over a property of which his mother was usufructuary”, it is not established that the gift was intended as a disguised gift of the building, nor is there a direct link between the sum and a purchase of the same amount.
The decision
The first civil chamber quashed, under article 922 of the Civil Code (Cass. 1re civ., 17 October 2019, no. 18-22.810, reported). The text requires reduction to be determined by forming a pool of all the assets existing at death, to which gifted assets are notionally added “according to their condition at the time of the gift and their value at the opening of the estate”; “if there has been substitution, account is taken of the value of the new assets at the date of the opening of the estate, according to their condition at the time of acquisition”.
“In so ruling, whereas it followed from its own findings that A. N. had used the sum of money given by his mother to acquire the bare ownership of a property, from which it followed that it was the value of that property at the date of the opening of the estate, according to its condition at the time of its acquisition, which had to be notionally added to the calculation pool of the reserved portion and the disposable portion, in order to determine any reduction, the court of appeal breached the above provision.”
What this changes for valuation
The money given is traced into what it bought. The substitution rule applies to rapport as to reduction: when the sum given was used to acquire an asset, that asset is added to the pool, at its value at death, in its condition at acquisition. Use on the same day, in the deed of purchase, establishes the link. The valuer therefore does not add back 53 357 €; they value at the date of death the right acquired in 1982. The article on the gift of money invested in a company and the one on concealed money used to buy a property apply the same logic to rapport and concealment, with their own dates.
A split right is valued for what it has become. The money bought a bare ownership, the mother keeping the usufruct. On the mother’s death, the usufruct ended and the son became full owner without paying anything. The value to add back at the opening of the estate is therefore that of the right acquired, assessed at that date: full ownership, in the condition of the property at acquisition. Had the usufruct belonged to a third party still alive, the bare ownership would have been valued taking into account the usufructuary’s age and the yield of the property, by an economic method rather than the tax scale. The glossary describes nue-propriété and démembrement.
Proportion, where the sum paid only part. Here the sum given represented 350 000 francs out of a price of 500 000 francs. Substitution then applies pro rata: the pool includes the fraction of the property’s value corresponding to the share financed by the gift, as for the compensation between spouses described in the article on separate property funded by the community. The report establishes that fraction from the deeds, then applies it to the value at death.
The calculation pool, then the indemnity. The value at death serves to know whether the gift exceeds the disposable portion. If it does, the reduction indemnity is then computed on the value of the property at the date of partition, as recalled in the article on the reduction indemnity at the date of partition. The report therefore provides two values of the same property, at death and at partition, in the condition at acquisition.
Reconstructing the 1982 condition. A building acquired forty years ago may have been transformed. The valuer retrieves the deed of purchase, the description of the property, the plans and later building permits, to value today the property as it then was, and presents separately the value of the improvements made since, which do not enter the pool. The guide on the standard court mission for a partition describes these reconstructions.
What the valuer takes from it
- When a sum given was used to acquire a property, the calculation pool of the reserved portion includes the value of that property at the opening of the estate, in its condition at acquisition, not the sum.
- Use of the sum in the deed of purchase, the same day, establishes substitution, even for a split right.
- A split right is valued as it stands at death; a bare ownership that became full ownership when the usufruct ended is added back as full ownership.
- If the sum financed only part of the price, substitution applies pro rata.
- The value at death serves the calculation pool; the reduction indemnity is then computed at the date of partition.
Further reading
The Market value page describes the assignment, its timescale and its fee. The guide Standard court mission: market value for a partition and the glossary entries réduction des libéralités, quotité disponible and nue-propriété complement this article. On the same theme: Gift of money invested in a company: rapport at share value and Reduction indemnity: value at partition, not at the opening. The decision is available on Légifrance.
What next
A gift of money used in a property purchase, and a reserved portion to check?
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