When several people want to become owners of a single property, they have two options:
Before making a decision, it's important to know all the ins and outs of each solution. You should also consider the pros and cons of each option.
Let's explore the characteristics of these two options together!
Joint ownership is a solution that allows all owners to benefit from the rights of the property without having to share it. Technically, it's easy to set up. However, it's best to focus on this option only if the property is managed in the short term. So, if you're looking for simplicity, this is the ideal solution.
The advantages of joint ownership
Generally, an ownership agreement can be made between the owners themselves or with a notary. What sets joint ownership apart is its simplicity. In fact, no administrative formalities are required.
In other words, you don't need to draft administrative statutes or apply for registration with the RCS. As a result, you won't have any administrative expenses.
Transferring property is also simpler when it's jointly owned. The owners don't need anyone's permission to transfer their share of the property. Plus, the other joint owners have 1 month to use their pre-emption right.
When it comes to day-to-day decisions, a majority of 2/3 can make them. These decisions relate to the renewal of leases, property maintenance and administrative acts.
However, exceptional decisions, such as sales and mortgages, must be taken unanimously. You can very well appoint a manager to administer the decisions taken and remind each heir of their shares.
The weaknesses of joint ownership
Despite the fact that joint ownership is a favorable option for those who want to keep things simple, there are disadvantages. Compared to the SCI, which allows for flexible transfer, joint ownership is quite tricky.
The owners have no choice but to share the property with the other heirs. Plus, if the property value exceeds €100,000, the gift taxes will be higher.
Upon the death of a joint owner, all their heirs automatically become owners, regardless of how many there are. Plus, each person's share will be deposited into a joint bank account. This account is frozen until the heirs sign a new agreement.
If you believe that the property you share with other heirs is a life project, then the SCI (Société Civile Immobilière - Real Estate Civil Company) is the solution. In principle, this option is suitable for those who wish to manage their property in the long term. To become a partner, it is necessary to sign a contract that highlights your rights and duties in every situation.
The advantages of the SCI
SCI stands for Société Civile Immobilière (Real Estate Civil Company). It's a company created by several different owners to collectively manage a property.
While joint ownership might be a default solution, an SCI lets you manage your shared property within a legal framework. However, you'll need to complete some administrative procedures.
In any case, your decision will have paid off because the transfer of the property is much easier. Indeed, the civil company guarantees a good organization of the transfer of the property to your heirs. Moreover, this act will be done according to your wishes, taking into account the articles of association of the SCI.
The drawbacks of a SCI
Unlike the implementation of joint ownership which is simplified, the administrative procedures are more cumbersome with the SCI.
You also need to cover the costs related to registration with the RCS (Trade and Companies Register) and publication in the official journal. Plus, it's essential to draft articles of association that detail everyone's contributions.
Regarding decision-making, whether it's routine or exceptional decisions, it's necessary to organize general meetings. At least once a year, the partners must organize a general meeting. Rules govern this process, specifically the drafting of minutes and a formal invitation for all partners.
Just like with joint ownership, the transfer is also easier with the SCI. However, it is necessary to respect the steps to follow. First, you must obtain the agreement of the other partners. Then, you must determine your transfer price. After that, you have to fill in administrative documents. Finally, you have to pay taxes.
Written by our expert La Rédaction
May 28, 2021
