All of French Company Law: ordinary law of companies and specific regime for different types of companies

Company Law (en cours)

The real estate civil company (SCI), which offers a regime suited to family relationships, is common among spouses, partners, ascendants or descendants, or within a blended family. The creation of the SCI in any of these configurations results in a "family SCI," also known as a "heritage SCI," governed by the provisions common to all civil companies, which, however, undergo certain adaptations due …

Asset preservation or transmission tool

COZIAN, The discreet charms of real estate civil companies, RJ com. 1992, 229; The good use of real estate civil companies, D. 1999, Chron., 1999; The charm of real estate civil companies: intact charm or faded charm, RJ com. 2004, 64; STORCK, FAGOT, de RAVEL d'ESCLAPON, Real estate civil companies, LGDJ, 3rd ed., 2024.

The real estate civil company (SCI), which offers a regime suited to family relationships, is common among spouses, partners, ascendants or descendants, or within a blended family. The creation of the SCI in any of these configurations results in a "family SCI," also known as a "heritage SCI," governed by the provisions common to all civil companies, which, however, undergo certain adaptations due to the kinship or alliance linking its partners.

In particular, the family real estate civil company (SCI) can enter into a residential lease for a duration of at least three years instead of a minimum duration of six years. Similarly, only family SCIs that meet the condition provided by Article 13(a) of Law No 89-462 of 6 July 1989, which requires being formed “exclusively between relatives and in-laws up to the fourth degree inclusive,” can give notice to tenants for the purpose of repossession for the benefit of one of their partners . Furthermore, they are exempt from being classified as professional lessors when they rent property to third parties.

The family real estate partnership is established to optimize asset management, facilitate its transfer, and preserve it.

The creation of a family real estate partnership is often considered with a view to donating a property for which the founder retains the usufruct. In practice, the manager grants the bare ownership of the company's shares to their descendants to initiate a transfer of assets while retaining the income from these properties. Additionally, the family real estate partnership helps avoid deadlock situations related to joint ownership.

The family real estate partnership (SCI) offers certain advantages related to property rights and taxation that facilitate the transfer of assets. Indeed, under Article 1861, para. 2, of the Civil Code, the transfer of shares to the transferor's ascendants or descendants is not subject to approval, unless otherwise provided by the statutes. Furthermore, tax allowances apply to the donation of shares, unlike an indivisible real estate asset. The mere act of transferring assets through a family SCI involves a tax discount.

Fundamentally, the family real estate civil company (SCI) serves as a tool to avoid scenarios of joint ownership that are prone to the risk of asset dissipation, by using the mechanism of dismemberment, which stabilizes ownership. Indeed, the rights attached to shares can be dismembered by separating usufruct from bare ownership. The usufructuary retains the right of use and the fruits, while the bare owner has the right to dispose of the property, provided they respect the usufructuary's rights. More precisely, once the dismemberment of the shares is completed, the usufructuary and the bare owner no longer have the freedom to transfer full ownership of the shares but can only transfer or donate their own right to the usufruct or bare ownership of the shares. Consequently, using a family SCI helps ensure the preservation of assets within the family unit and their longevity.

Cass. 3e civ., 31 May 2007, LawLex202300010782JBJ, excluding the benefit of this preferential regime in the presence of a sole shareholder of an SCI who repurchased the shares of the other shareholders with whom he had no family ties; 28 September 2011, LawLex202300010783JBJ, considering, however, that an SCI whose shares are exclusively held by two brothers can give notice to the tenant for the purpose of repossession for the benefit of one of its shareholders.

Company Law (en cours)

675. Asset preservation or transmission tool(1)

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Les notions juridiques connexes

675. Asset preservation or transmission tool(1)

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