Can an SCI Buy a Property Before It Is Registered?

Can an SCI buy a property before it is registered?

An SCI (société civile immobilière) does not exist as a legal person until it is registered, so it cannot itself sign a purchase or take on a commitment before that date. Yet purchases and other acts often have to be made while the company is still in formation - a promise of sale is signed, a loan is arranged, a deposit is paid. French law allows these acts to be done by a founder for the account of the company in formation and then taken over by the SCI once it is registered, so that the company is treated as having been bound from the outset. This guide explains when an SCI can act before registration, the three ways it takes over a pre-registration commitment, how the act must be worded after the important change in the case law in late 2023, and what happens to the founders if the company never takes the act over.

The subject matters because getting it wrong has real consequences. If the reprise - the taking-over - is not carried out through one of the recognised procedures, the SCI is not bound and the founder who signed remains personally liable for the commitment. A purchase meant for the company can end up belonging to the individual who signed, with tax consequences to match. The framework is set by Article 1843 of the Civil Code and its application, and it rewards planning the sequence of the purchase and the registration with care.

Why it matters: no legal personality until registration

A civil company enjoys legal personality only from its registration in the trade and companies register. Before that, the company is in formation: it has no legal existence and cannot, in its own name, do the acts that require a legal person. The point is not academic. A company in formation that lacks legal existence for want of registration cannot make a valid over-bid at auction (Cass. civ., 25 June 1997, no. 95-14546). And proceedings brought by a company in formation, which has no legal personality, are affected by a fundamental irregularity that cannot be cured: such a company cannot appeal a decision, and it makes no difference that it was registered some months after the appeal, or that its members approved the acts taken in its name on the day of the appeal (Cass. civ., 2e ch., 4 March 2021, no. 19-22829).

Because the company cannot act for itself, the law provides a mechanism: a founder - a member, or the non-member manager - signs the act for the account of the company in formation, and the company, once registered, takes the act over. When that taking-over is done properly, the company is treated as having entered into the act from the date it was signed. The mechanism is what allows a property to be bought, a loan arranged or a lease signed before the SCI formally exists, without leaving the transaction in limbo. But it works only through the recognised procedures, and the founder who signs needs to know that until the reprise is regular, the commitment is theirs.

The fate of acts done for the account of the company in formation - that is, before the registration that gives it legal personality - is fixed by Article 1843 of the Civil Code and its application decree. That framework, and the case law interpreting it, sets out precisely how the SCI takes over what was done in its name, and treats any other route as ineffective. Understanding it is what separates a purchase that ends up safely in the company from one that stays with the individual who signed.

The three ways an SCI takes over a pre-registration act

The Cour de cassation has settled that a commitment made for the account of a company in formation can be taken over in three ways, and only three. The reprise results either from the signature of the articles where a schedule of the acts has first been annexed to them; or from a mandate given before registration to a member or to the non-member manager, determining the nature and terms of the commitments to be taken; or, after registration, from a decision taken by the majority of the members (Cass. com., 20 January 1987, no. 85-15568; Cass. civ., 5 January 1994, no. 90-17902).

The first route covers acts done before the articles are signed. A schedule (état) of the acts accomplished for the account of the company in formation, stating for each the commitment that would result for the company, is presented to the members before they sign the articles and is annexed to them; the signature of the articles then carries the taking-over of those commitments once the company is registered. A clause in the articles simply stating that their signature will carry the reprise is not enough on its own - a schedule of the acts must actually be annexed (Cass. com., 13 March 2001, no. 97-22288).

The second route covers acts done between the signature of the articles and registration, which is the more frequent situation. The members may, in the articles or by a separate act, give a mandate to one or more of them, or to the designated non-member manager, to take commitments for the account of the company; provided the commitments are determined and their terms specified in the mandate, registration carries the taking-over. A mandate that is too general is insufficient to bind the company in formation (Cass. com., 24 March 1998, no. 96-11366; 14 November 2006, no. 05-16527), so a founder relying on the reprise must be able to show a special mandate, given in the articles or a separate act (Cass. com., 21 July 1987, no. 86-11334).

The third route applies after registration. Outside the two procedures above, a taking-over can result, once the company is registered, only from a decision taken - unless the articles provide otherwise - by the majority of the members. Any other technique of ratification, implicit or not, is excluded, and a minutes of the deliberation recording the reprise must be produced (Cass. com., 23 January 1978, no. 76-12017). The assembly must be held after the registration, not before. Crucially, there is no such thing as an implicit reprise: the Cour de cassation rejects it, holding that the taking-over can result only from the recognised procedures (Cass. civ., 26 April 2000, no. 98-10917; 1 April 2003, no. 00-21042; 16 September 2021, no. 20-17372). All the members concurring in an act does not, by itself, establish a regular taking-over (Cass. com., 6 December 2005, no. 03-16853), and a clause providing that registration will carry the reprise automatically is invalid - one of the three procedures must be regularly accomplished (Cass. civ., 3e ch., 15 October 2015, no. 13-24355; 23 May 2019, no. 17-31463).

How will your SCI take over the purchase?

The right procedure depends on when the act is signed. Pick your situation - the check shows which route applies.

How the act must be worded - and the 2023 change

Only acts done in the name of, and for the account of, the company can be taken over. For a long time the courts applied this strictly. To avoid any ambiguity about the capacity in which the founder signs, the practice was - and remains prudent - to state at the place of signature: "Mrs/Mr [name], for the account of the company [name], in formation", and to avoid concluding the act "for the benefit of the SCI [name] in the course of formation, represented by Mrs/Mr [name]." Under the strict approach, describing the founder as the "representative" of the company was dangerous, because a company without legal personality cannot be represented, and an act so worded risked being treated as concluded directly by a non-existent company and therefore void.

That strict position has been softened. On 29 November 2023 the Cour de cassation changed its case law: a court may now examine all the circumstances, both intrinsic and extrinsic to the act, to determine whether the common intention of the parties was that the act should be concluded in the name of, or for the account of, the company in formation, whatever the exact wording used (Cass. com., 29 November 2023, nos. 22-12865, 22-18295 and 22-21623). An act that does not use the sacramental formula is no longer automatically void; the judge searches the parties' real intention. This is a significant relaxation of the earlier line, under which an imperfectly worded act - for example one describing the founder as "representative" - was struck down regardless of what the parties plainly meant.

The practical guidance nonetheless remains to word the act carefully. The 2023 change gives a court room to save an imperfectly drafted act by reference to the parties' intention, but it does not make wording irrelevant, and it does not remove the three procedures of reprise, which are still required for the company to be bound. Relying on a judge to reconstruct the common intention is a risk that is easily avoided by signing "for the account of the company in formation" and by completing one of the three taking-over procedures. The prudent course is to draft the act correctly and carry out the reprise properly; the 2023 case law may rescue an imperfectly worded act after the event, but it does not reduce the value of getting the wording and the procedure right at the time.

Is your pre-registration act safe?

A pre-registration act binds the SCI only if it clears each hurdle. Pick the point you want to test - the check shows what the law requires.

The effect of taking over - and what happens if the SCI does not

Where the reprise is regular, its effect is retroactive. The company that regularly takes over a commitment subscribed in its name while it was in formation - whether a guarantee for future debts or the acquisition of a property - is bound from the date the contract was signed (Cass. civ., 3 December 1980, no. 79-12619). The acts are deemed to have been contracted by the company from the origin. And the act recording the taking-over, by a duly registered company, of the commitments subscribed by its founders is declaratory: it does not have to be published to be opposable to third parties (Cass. civ., 9 July 2003, no. 01-10863). So a proper reprise puts the company in the position it would have been in had it signed the act itself, backdated to the day of signature.

Where the reprise is not carried out, the position is very different. In the absence of a taking-over, the persons who acted in the name of the company in formation before registration are held - without solidarity between the founders, since solidarity is a feature of commercial companies - to the obligations arising from the acts they accomplished (C. civ. Art. 1843). The failure to take the act over does not annul the operation carried out by the founders, but it means the founding members alone are bound (Cass. com., 20 February 2007, no. 05-14058). A founder who signed a purchase that the SCI never takes over can find that the property belongs to them personally rather than to the company - a result confirmed where two spouses bought lots for an SCI in formation, no schedule of acts or mandate or minutes of a taking-over decision existed, and the courts held that the company had not taken over the commitments so the spouses had remained the owners of the property (Cass. com., 20 January 1987, no. 85-15568).

There is a practical safeguard for property purchases. Notarial practice provides that the acquisition is made subject to the suspensive condition of the registration of the civil company; failing registration, the commitments are presumed to have been subscribed by the signing members personally, in the proportions stated in the purchase deed. This protects the seller, who knows who is bound if the company never comes into existence, and it gives the founders certainty about their position. It also connects with the tax treatment: during the formation period, acts transferring property for the account of the civil company are immediately taxable to registration duty, and no duty is due again on registration if the company regularly takes over the commitments, the taking-over act itself attracting only the fixed duty. A word of caution on timing: the tax authorities treat the formation period of a civil company as beginning only after the articles are signed, so an act signed before the articles can expose the parties to a double charge of duty - a reason, beyond the reprise rules, to keep pre-articles acts to a minimum and to structure the purchase around the registration.

Taking over a pre-registration act - the three routes at a glance

Frequently asked questions about acts before an SCI is registered

This article is for general information only and states French law and case law as published in the sources available at the date shown above, including the Cour de cassation's decisions of 29 November 2023. It does not constitute legal or tax advice. How a pre-registration act should be structured and taken over depends on the transaction and its timing. Always seek qualified legal advice before signing for an SCI in formation.