Family SCI or joint ownership: which structure to choose for a family property purchase?

By Olivier Paquerau, lawyer of counsel at ARST Avocats

Buying a home, a rental property or a family residence with several people quickly leads to a key question: should you buy in joint ownership or form a real estate company?

The choice is not limited to the formalities of departure. It determines how to decide, how to finance the property, how to distribute the costs, how to organize its occupancy, how to remove a family member, and how to prepare for its transfer.

In practice, joint ownership is often suitable for a simple acquisition involving few people and intended to be temporary. A family-owned real estate company (SCI) is generally better suited to a long-term project that requires organizing governance, relationships between partners, and inheritance. However, it entails costs, operational obligations, and partner liability that should not be underestimated.

The choice must therefore be made based on the actual project, and not on an abstract preference for one or the other setup.

Family SCI and joint ownership: two very different forms of ownership

Joint ownership: an immediate solution

When several people buy a property directly, each holds a share of it: they are in joint ownership.

No company is created and no registration is required. This simplicity is its main advantage. It can be suitable for a one-off purchase or a project where the participants, their contributions, and the duration are clearly defined.

This simplicity, however, has a downside. Under Article815 of the Civil Code, no one can be forced to remain in joint ownership. Each co-owner can therefore, in principle, request partition.

A joint ownership agreement can temporarily organize the management and enjoyment of the property, but it does not give the project the same stability as a corporate structure designed to last.

The family SCI: an organizational tool

A family SCI (Société Civile Immobilière) is not a separate legal form. It is a civil company whose partners belong to the same family.

The company becomes the owner of the building, and the partners hold shares. The articles of association can allocate powers, establish majority voting rights, regulate share transfers, and stipulate the conditions for the use or financing of the property.

Its formation nevertheless requires the drafting of appropriate articles of association, the making of contributions, the publication of a notice and registration through the single window for business formalities.

It then involves a real social life: collective decisions, minutes, accounting follow-up and tax returns.

The Corporate Law team at ARST Avocats assists in particular with the formation of civil companies, the drafting of articles of association and the organization of relations between partners.

Governance and the risk of deadlock

In joint ownership, the powers depend on the nature of the act

The decision-making rules are not uniform.

A co-owner can take the necessary measures to preserve the property on their own. Co-owners holding at least two-thirds of the rights can perform certain administrative acts and enter into certain leases.

Disposals of property remain, in principle, subject to the agreement of all parties, subject to the judicial procedures provided for by law.

These rules are specified by article815-3 of the Civil Code.

A co-ownership agreement can improve day-to-day operations, appoint a manager, and specify how expenses are to be shared. However, it does not eliminate the right to request partition or the difficulties that may arise in the event of death, separation, or a lasting disagreement.

In a SCI (Société Civile Immobilière), the articles of association can anticipate sensitive decisions

The articles of association determine the powers of the manager and the decisions that must be submitted to the partners.

They can stipulate different majorities depending on whether it concerns works, a new loan, a rental, the sale of the building or the entry of a new partner.

They can also establish a right of pre-emption, organize the valuation of shares and provide for a procedure for dealing with blockages.

This flexibility is only useful, however, if the articles of association are appropriate for the project. A standard model that grants overly broad powers to the manager or requires unanimity for every decision can recreate the very obstacles that the SCI (Société Civile Immobilière) was specifically designed to avoid.

Departure of a member and family transfer

Leaving joint ownership or transferring shares

In joint ownership, exiting leads to division, the purchase of the share by the other joint owners, or the sale of the property.

In a SCI (Société Civile Immobilière), a partner can transfer their shares or request their withdrawal under the legal and statutory conditions.

However, exiting the company is not automatically easier. The sale may be subject to the approval of the other partners, and shares in a family-owned SCI (Société Civile Immobilière) do not always have an immediate market.

The legal framework for approval is set out in Article1861 of the Civil Code.

The withdrawal and allocation of a property or the conversion of jointly owned property into a real estate company (SCI) may entail registration fees, division fees, and, depending on the transaction, capital gains tax. Its legal and tax costs must be calculated before any decision is made.

Since June 27, 2026, the transfer of shares of a legal entity whose assets consist primarily of real estate must, under penalty of nullity, be recorded by an authentic instrument, an instrument countersigned by a lawyer or, in cases where he is legally authorized to draft it, an instrument drawn up by a chartered accountant.

This new requirement stems fromArticle 1865-1 of the Civil Code.

Prepare for a gradual transmission

The SCI allows for the gradual transfer of shares, possibly by dividing their ownership between usufruct and bare ownership.

It also facilitates the maintenance of common governance when economic ownership is distributed across several generations.

The tax value of usufruct and bare ownership is determined in particular by the scale inarticle 669 of the General Tax Code.

However, a distinction must be made between the division of the building and that of the company shares.

The usufruct of shares grants rights attached to those shares and to the distributed profits. It does not, in itself, confer a personal right to occupy the property belonging to the SCI (Société Civile Immobilière - French real estate company). Occupancy must be governed by the articles of association, a corporate resolution, or an agreement.

The Personal and Succession Law team at ARST Avocats can intervene in coordination with practitioners in charge of the transfer.

Taxation of SCIs and joint ownership

The SCI subject to income tax

A SCI (Société Civile Immobilière) engaged in civil activity and subject to income tax is fiscally transparent.

When a company rents out an unfurnished building, each partner is taxed on their share of the rental income, whether or not they have actually received the corresponding amounts.

Expenses are deductible only under the conditions provided for property income.

The declaration of real estate companies not subject to corporation tax is presented on the official page dedicated to form 2072-S.

The SCI (real estate investment company) subject to corporate tax and commercial activities

The option for corporate tax profoundly changes the treatment of profits and resale.

The building is depreciated, but the capital gain is determined based on its net book value. The distribution of funds to the partners may then trigger a second tax assessment.

The exercise of a commercial activity, in particular certain furnished rentals or a regular buying and reselling activity, may also lead to liability for corporation tax, subject to the applicable administrative tolerances.

The choice between SCI with income tax, SCI with corporation tax and direct ownership cannot therefore be made solely on the basis of the immediate tax rate.

It must include:

• the envisaged length of detention;
• the level of income;
• the importance of the work;
• the resale strategy;
• financing needs;
• transmission objectives.

The Tax team at ARST Avocats assists individuals, executives and investors in the tax and wealth structuring of their real estate acquisitions.

Free occupancy of the property by a family member

In a SCI (Société Civile Immobilière - French real estate company), an occupancy that must be formalized

When a SCI subject to income tax makes accommodation available free of charge to a partner, it is regarded as reserving the right to use it.

No imputed rent is added to the income. Conversely, expenses related to the property are, in principle, not deductible from rental income.

This consequence can be significant when the acquisition is financed by a loan or when major works are planned.

The provision must be authorized in accordance with the statutes and documented.

An agreement may specify, in particular:

• the duration of the occupation;
• the distribution of costs;
• insurance obligations;
• taking charge of the work;
• the conditions for vacating the premises;
• the possible compensation to be paid by the occupant.

This agreement also helps to prevent an advantage granted to one partner from creating a lasting imbalance with other family members.

In the case of joint ownership, compensation may be due

The co-owner who enjoys exclusive use of the property is, in principle, liable for compensation, unless otherwise agreed, in accordance with Article815-9 of the Civil Code.

The co-owners can therefore decide on free occupancy, but this decision must be clearly established and its economic effects anticipated.

Bank financing and guarantees

A rental property with identifiable income

When the property is intended for rental, the bank analyzes the expected rents, the charges, the possible vacancy, the contribution and the financial situation of the partners.

She can ask:

• a mortgage on the property;
• a personal guarantee;
• the pledging of certain receivables;
• the freezing of partners' current accounts.

Therefore, the SCI does not necessarily protect the personal assets of the partners against the guarantees they have given.

A property occupied rent-free to repay the loan

When the property is occupied free of charge, the SCI does not have rental income.

Repayment then depends on the partners' contributions, current accounts, or regular payments. The bank primarily examines their personal income, debt levels, and the sustainability of their commitments.

It may demand stronger guarantees or reject an arrangement whose resources appear insufficiently secure.

The financing plan must be consistent with the bylaws and the occupancy agreement. It is helpful to determine the following in advance:

• who finances the contribution;
• who pays the installments;
• if the payments constitute contributions or advances to the current account;
• how these advances will be repaid upon a sale or exit.

The Banking and Financial Law team at ARST Avocats deals with financing, guarantees and liabilities related to real estate transactions.

The liability of SCI partners

The SCI does not constitute an absolute shield.

According to Article1857 of the Civil Code, the partners are indefinitely liable for the company's debts in proportion to their share of the capital.

However, creditors must first pursue the company in vain, in accordance with Article1858 of the Civil Code.

In addition to this legal responsibility, personal guarantees or other guarantees requested by the bank may be required.

Non-resident partners and international situations

The presence of a non-resident partner requires a specific analysis.

The holding and transfer of shares in a French SCI, property income, capital gains and current accounts may be subject to French territoriality rules, in addition to any applicable tax treaty.

The residence of the partners, the location of the building and the exact nature of the rights transferred must therefore be examined before the formation of the SCI, the donation or the transfer of shares.

This verification is particularly important when a project involves family members residing in several countries. A solution that is valid under French law may result in different treatment in the partner's country of residence.

Comparative table between family SCI and joint ownership

Criteria	Family real estate company	Joint ownership
Set up	Articles of association, legal notice, registration and incorporation costs	No structure to create upon purchase
Property owner	The SCI is the owner; the family holds shares	Each co-owner directly holds a share
Decisions	Rules established by the statutes	Legal rules vary depending on the nature of the act
Exit	Transfer or withdrawal of shares, subject to approval and valuation to be anticipated	Sharing, buying out the share, or selling the property
Transmission	Progressive donation and possible division of shares	Donation or inheritance of undivided shares, with less structured governance
Occupation by a member	Social decision and agreement recommended; tax consequences to anticipate	Compensation is generally due in the event of exclusive use, unless otherwise agreed
Funding	Loan taken out by the SCI (real estate investment company), often secured by the building and the partners	Loan taken out directly by the joint owners
Responsibility	Partners are jointly and severally liable in proportion to their shares, after legal action against the company	Each co-borrower bears their own obligations; joint and several liability may arise from the loan agreement
Functioning	Social decisions and accounting and reporting follow-up	Easier management, but risk of blocking and sharing

How to choose for your family project?

Before making a decision, five questions need to be addressed:

1. Will the property be rented, occupied free of charge, or used successively by several family members?
2. Is the project temporary or intended to continue over several generations?
3. Who provides the funds and who will actually bear the costs, the work and the expenses?
4. How will a member be able to leave and how will their rights be valued?
5. Is the priority immediate simplicity, control of governance, transmission, or long-term taxation?

The real estate acquisition must also be secured independently of the vehicle chosen: title audit, suspensive conditions, financing, works, purpose of the property and organization of its operation.

The Real Estate and Commercial Leases team at ARST Avocats assists investors and owners in structuring and securing their transactions.

Frequently Asked Questions

Is a family SCI (Société Civile Immobilière) always preferable to joint ownership?

No. For a simple or temporary purchase between two people, joint ownership may be sufficient.

The SCI becomes particularly useful when the project needs to last, integrate several generations or precisely organize the powers and exit conditions.

Can a property already held in joint ownership be contributed to a SCI (French real estate investment company)?

Yes. However, the contribution transfers ownership of the property to the SCI and may entail duties, deed fees and capital gains tax.

Existing financing and bank agreement must also be reviewed.

Is it possible to occupy a property belonging to the SCI free of charge?

Yes, if this provision is compatible with the company's purpose and decided by the competent body.

It must be formalized and its tax, financial and family consequences must be anticipated.

Does a SCI (Société Civile Immobilière) protect its partners against bank debts?

Not entirely.

Partners are liable for company debts under the conditions set out in the Civil Code and banks frequently require personal guarantees or sureties.

Does a SCI necessarily make it easier to obtain a loan?

No.

The bank examines the project, the income from the property, the financial capabilities of the partners and the proposed guarantees.

A SCI that makes the property available to a partner free of charge does not have rents to ensure the repayment of the loan.

Family SCI or joint ownership: a decision to prepare before buying

Joint ownership offers immediate implementation and initially simple operation, but it exposes the project more to the risk of division and disagreements.

The SCI (Société Civile Immobilière) allows for the organization of governance, transfer, occupancy, and financing. In return, it requires truly tailored articles of association, regular monitoring, and a comprehensive tax analysis.

Before signing the promise or submitting a funding request, it is recommended to compare the two solutions based on concrete data:

• the identity and residence of the participants;
• the contribution of each individual;
• the use of the property;
• the length of detention;
• expected revenues;
• bank guarantees;
• the transmission objective.

Are you considering a family property purchase? ARST Avocats assists you in choosing the structure, drafting the articles of association and agreements, tax analysis, and securing financing and transfer.