When several people want to own a single property, they have two options:
Before making a decision, it's important to know the ins and outs of each solution. You also need to consider the positive and negative points of each option.
Let's find out more about these two alternatives!
Indivision 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 to be managed in the short term. So, if you're looking for simplicity, this is the ideal solution.
The strengths of joint ownership
Generally speaking, the indivision agreement can be drawn up between the owners themselves or in the presence of a notary. What sets indivision apart is its simplicity. No administrative formalities are required.
In other words, you don't need to draw up articles of association or apply for registration with the RCS. As a result, you won't have to incur any administrative expenses.
It's also simpler to sell a property in joint ownership. Owners do not need to obtain anyone else's agreement to sell their share of the property. In addition, the other joint owners have 1 month to exercise their right of pre-emption.
For day-to-day decisions, a 2/3 majority is required. These decisions relate to lease renewals, property maintenance and administrative acts.
On the other hand, exceptional decisions, such as sales and mortgages, require unanimous agreement. You may well appoint a manager to administer the decisions made and to remind each heir of his share of the estate.
The weaknesses of joint ownership
Despite the fact that joint ownership is a favorable option for those who want to keep things simple, it does have its drawbacks. Compared with the SCI, which enables a flexible transfer of ownership, joint ownership is rather tricky.
Owners have no choice but to share the property with other heirs. What's more, if the value of the property exceeds €100,000, the gift tax will be higher.
On the death of an undivided co-owner, all his or her heirs automatically become owners, regardless of their number. In addition, each heir's share will be paid into a joint bank account. This account is blocked until the heirs sign a new agreement.
If you consider that the property you share with other heirs is a life project, then the SCI is the solution. In principle, this option is suitable for those wishing to manage their property for the long term. To become a partner, you'll need to sign a contract setting out your rights and obligations in each situation.
The advantages of SCI
SCI stands for Société Civile Immobilière. It is a company created by several different owners. The aim is to manage a property collectively.
If joint ownership is the default solution, the SCI allows you to manage your shared property within a legal framework. However, you will need to take a number of administrative steps.
In any case, your decision will have paid off, as the transfer of the property is much easier. In fact, a non-trading company ensures that the transfer of the property to your heirs is properly organized. Moreover, this act will be carried out at your convenience, taking into account the SCI's articles of association.
Shortcomings of SCI
Unlike joint ownership, which is simpler to set up, SCI involves more red tape.
You will also need to pay for registration with the RCS and publication in the official gazette. In addition, it is essential to draw up articles of association specifying the contributions of each party.
When it comes to making decisions, whether routine or exceptional, General Meetings must be held. At least once a year, associates must hold a General Meeting. There are a number of rules governing this process, including the drawing up of minutes and a formal convocation for all associates.
As with undivided ownership, transfer is also easier with an SCI. However, there are a number of steps to follow. First, you need to obtain the agreement of the other partners. Next, you need to determine your transfer price. After that, you'll need to fill out a number of administrative documents. Finally, you have to pay taxes.
Written by our expert La Rédaction
May 28, 2021
