Years spent living rent-free in a parent’s property can come under scrutiny during estate settlement. A recent case highlights the complexities that arise when a long-term, informal living arrangement impacts the distribution of assets.
The situation unfolded with parents owning two properties in the Île-de-France region, each approximately 35 square meters and valued at around €310,000 in 2025. Two decades ago, their youngest daughter, facing financial hardship, requested their assistance. They offered her the use of a vacant apartment as a temporary solution. However, this temporary arrangement became permanent – she remained in the property for twenty years, and the parents were unable to change the situation.
This prolonged, rent-free occupancy didn’t go unnoticed when the mother passed away. The siblings argued that the occupation prevented their parents from maximizing their estate’s potential. According to Maître Aurélien Geoffroy, a family notary, the lack of rental income over those years diminished the assets available for distribution. Consequently, the siblings requested an ‘occupation indemnity’ as part of the estate settlement.
Understanding Occupation Indemnity
Legally, this indemnity represents a debt owed by the daughter to the estate. Initially, the amount was calculated at €1,100 per month – equivalent to market rent – totaling a theoretical €264,000. However, due to a five-year statute of limitations on claiming such indemnity, the siblings could only legally claim €66,000.
The notary explained that the claim would be included as an asset of the estate, and the amount would be divided equally among the three siblings – each entitled to approximately €22,000. This would leave the daughter with a financial obligation of €44,000 (€66,000 – €22,000).
Reaching an Amicable Solution
Recognizing the daughter’s inability to pay the full amount, the heirs reached a compromise. The daughter would receive only the amount guaranteed by her legal share of the inheritance (réserve héréditaire). The remaining portion of the estate (quotité disponible) would be distributed between her two siblings. This amicable agreement avoided a potentially costly and divisive legal battle.
Preventing Inheritance Disputes: The ‘Loan for Use’
To avoid similar conflicts in the future, Maître Geoffroy recommends establishing a “prêt à usage” (also known as a commodat) agreement. This is a free loan, eliminating the need for rent payments and providing clear documentation of the arrangement. The agreement specifies the terms of the occupancy and allows for a defined end date or a reasonable notice period for termination.
Alternatively, a formal lease agreement could be established, requiring rent payments and subjecting the income to taxation. However, the prêt à usage offers a simpler, tax-free solution for families wishing to provide housing assistance without creating future inheritance complications.
Further Reading: For more information on estate planning and inheritance laws in France, consult the Council of Notaries of France.
