Personal Liability of an SCI Gérant

Personal liability of an SCI gérant

Managing an SCI (société civile immobilière) carries personal risk, and the gérant who understands where that risk lies is far better placed to avoid it. A gérant can be liable to the company and its members for management faults, to third parties in narrower circumstances, and to the tax authorities and social bodies for the company's unpaid liabilities - and in an insolvency can be made to bear part of the company's shortfall. But the exposure is bounded by rules that protect a manager who acts properly: a member's mere disappointment is not enough, a third party must show a fault detachable from the functions, and a gérant who simply carried out the members' own decisions is not at fault. This guide sets out the gérant's liability to the company and the members, the two actions that can be brought, the narrow liability to third parties, the tax and insolvency exposure, and how a gérant limits their personal risk.

The subject is one every acting gérant should understand, because the difference between a protected manager and an exposed one usually lies in things that are within the gérant's control: keeping proper accounts, insuring the property, staying within the powers the articles give, getting the members' authorisation for the acts that need it, and documenting the decisions the members themselves take. The law does not make a gérant an insurer of the company's fortunes; it makes them answerable for their own faults. Knowing which is which is what lets a gérant manage confidently rather than defensively.

Liability to the company and the members

The core rule is that each gérant is individually liable, to the company and to the members, for breaches of laws and regulations, for violations of the articles, and for faults committed in their management (C. civ. Art. 1850, paragraph 1). Where a legal person is gérant, its directors incur the same liability as if they managed in their own name. But liability only arises where the breach has caused a loss - to the company or to a member - so a fault without a resulting préjudice does not, by itself, sound in damages, and where the injured member has also been at fault the damages can be reduced.

Each of the three heads has content. The gérant answers for breaches of legal and regulatory provisions - the rules governing civil companies, but also the general law, so a breach of fiscal, employment or criminal rules can engage the gérant. Among the breaches of the civil-company rules are the absence of a mandatory statement in the articles or an irregular formality on incorporation, the failure to communicate the company's books and documents to the members at least once a year, and the failure to consult the members on a contract between the company and one of its gérants. The gérant answers, too, for violating the articles: concluding a contract in defiance of a clause forbidding it without the members' prior authorisation is a fault - though, as the courts have held, the company's claim for damages fails if it cannot prove the loss the breach caused it.

The third head, management faults, is the widest and most litigated. Keeping incomplete and confused accounts, failing to pay the insurance premiums so that the cover lapses - and a gérant who carries out construction must take the compulsory structural-damage insurance - or drawing on the members' current accounts to acquire personal property, have all been treated as management faults giving rise to damages. But there is an important limit: a management fault cannot be held against a gérant who did no more than carry out the unanimous decisions of the members' meeting. Where the members had unanimously agreed to buy another building that turned out to be ruinous, their action against the gérant was rejected - the gérant had executed their own decision, not committed a fault of their own. So a gérant who acts on a properly taken members' decision is protected, which is one reason significant acts are put to the members rather than taken by the gérant alone.

The two actions: individual and social

Two distinct actions can be brought against a faulty gérant, and they are often confused. The individual action belongs to a member who has personally suffered a loss from the gérant's fault, and lets them claim compensation under the ordinary law of liability; where it is delictual it prescribes after five years (C. civ. Art. 2224), the member must establish a personal loss distinct from the company's, and any damages go to that member. The catch is the distinctness requirement: a loss that is merely the corollary of the company's loss - a fall in profits, insufficient distributions, a diversion of the company's receipts - is not a distinct personal loss, so a member cannot use the individual action to recover their share of a harm suffered by the company as a whole. A genuinely personal loss, such as the lost chance of a profit a member would have made, can be recovered; a proportionate slice of the company's loss cannot. One point favours the member: their action for a personal loss is not subject to the demanding "separable fault" condition that governs claims by third parties.

The social action (action sociale) seeks to repair the loss caused to the company itself, and requires a fault, a loss to the company, and a causal link between them. It is normally brought by the company's legal representatives - most often the new managers suing the former ones - but the law also lets one or more members bring it on the company's behalf, the action ut singuli, under Article 1843-5 of the Civil Code, though the members cannot group together and must each act separately. When it succeeds, the damages go to the company, not to the members who brought it, and the company must be properly joined to the proceedings. Two protections make the social action robust: no decision of the members' meeting can extinguish the liability action for a fault committed in the management, so the quitus - the discharge - given to a gérant does not bar it; and a member's own failings cannot be raised to defeat their action against a gérant who, for instance, never rendered an annual account of their management. The members can also seek conservatory measures, such as a judicial mortgage, in the company's name to secure any damages, and where several gérants are involved but only one caused the fault, that one can be pursued alone.

Liability to third parties: the separable fault

Towards outsiders, the gérant is far better protected, because a third party can pursue the gérant personally only where the fault complained of is separable from the functions and personally imputable to the gérant. That means the gérant must have intentionally committed a fault of particular gravity, incompatible with the normal exercise of their management functions - a high bar, and the same one that applies to company directors generally, expressly extended to the gérant of an SCI. Short of that, the gérant is shielded, and the third party's remedy is against the company.

What clears the bar and what does not is instructive. Deliberately persisting in the violation of a legal obligation, or actively and personally taking part in acts of unfair competition against the company, has been held a separable fault; so has a striking case in which the gérantes of an SCI sold the company's apartments to a company run by one of them, which then resold them cheaply to the gérantes or their families, while the SCI went unpaid on its vendor's credit and the gérantes renounced the vendor's security - self-dealing that stripped the company for their own benefit. On the other side, selling shares without disclosing a pledge over them was held not to be an intentional fault of particular gravity; nor was a gérant's failure to secure payment of an architect where nothing showed a detachable fault; nor a gérant's mere passivity or inaction in the face of a dispute. Where the fault is not detachable, only the company's liability can be engaged: the third party sues the solvent company, which may in turn sue the gérant, and a direct action against the gérant is rare. Finally, where several gérants cooperated in the same acts, their liability towards third parties and members is solidary, and in their internal relations the court fixes each one's contributive share (C. civ. Art. 1850, paragraph 2), so a gérant who paid can recover the others' shares.

Could you be personally liable as gérant?

Who is claiming, and for what, decides your exposure. Pick the situation - the check shows how the law treats it.

Tax, social and insolvency liability

Beyond the company, the members and third parties, the gérant faces three further exposures that arise from the company's own defaults. The first is tax. The gérant of an SCI, like any company director, can be declared jointly liable for the payment of the taxes and penalties owed by the company where fraudulent manoeuvres, or a grave and repeated failure to observe fiscal obligations, have made the recovery of those taxes and penalties impossible (LPF Art. L. 267). The finding of the fiscal breaches is itself enough to establish the gérant's personal liability, without any need to prove fraudulent manoeuvres in addition, and the court cannot modulate the joint liability by the gravity of the breaches. But there is a safeguard: before pursuing the gérant, the tax administration must prove that all its actions against the company itself have been brought. So this is a serious exposure, reserved for grave and repeated default, and secondary to the pursuit of the company.

The second is insolvency. Where the SCI is put into redressement or liquidation and the liquidation reveals an insufficiency of assets, the court can, for a management fault that contributed to that insufficiency, order that the shortfall be borne, in whole or in part, by the gérant or gérants or some of them (C. com. Art. L. 651-2). Crucially, mere negligence in the management does not engage this liability - the threshold is a genuine management fault, not an error of judgment or a simple oversight - so a gérant is not made to answer for an insolvency they did not culpably cause. The third exposure is to the social bodies: as a rule only the company is condemned to the penalties for unpaid social contributions, and, absent grave fault, the gérant is not personally bound to pay them - though a gérant responsible for fraudulent manoeuvres or grave, repeated breaches over undeclared work can be made jointly liable there too.

A separate and very common exposure sits alongside these: the personal guarantee. A gérant can personally stand as guarantor (caution) of the company's commitments, and creditors or a bank often require it - but this is a voluntary undertaking signed by the gérant in their own name, not a liability of the office. It puts the gérant's own assets on the line, its reach depends on their matrimonial regime, and it is governed by the protective, formal rules of the consumer code. A gérant asked to guarantee the company's borrowing should negotiate its terms - a cap and a duration, an end tied to the cessation of their functions, an end on a transformation or merger - rather than sign it as presented. And a gérant who is a substantial member may be treated as an informed guarantor who did not need to be warned by the bank, which narrows their later defences. The guarantee is examined further in our guide to financing an SCI purchase.

Is your fault separable from your functions?

Third-party liability turns on whether the fault is detachable. Pick the conduct - the check shows how it is treated.

Protecting yourself: how a gérant limits exposure

Most of what protects a gérant is within their own control, and it follows directly from the rules above. Keeping proper, complete accounts and rendering an annual account to the members removes one of the most common grounds of liability and of removal; insuring the property - including the compulsory structural-damage insurance where construction is carried out - removes another. Staying within the powers the articles confer, and obtaining the members' authorisation for the acts the articles reserve, such as the sale or mortgage of the property, protects against the charge of exceeding one's powers. And putting significant decisions to the members, and documenting the decisions they take, converts what might otherwise be a management fault into the execution of a members' decision, for which the gérant is not liable.

Two further points round out the picture. On the criminal side, there is no penal offence specific to the directors of civil companies, but the gérant is exposed to the ordinary criminal law - the misuse of company assets has been found, for example, where abnormal cash flows passed between an SCI and a related trading company - so the same discipline that avoids civil liability, acting in the company's interest rather than one's own, avoids the criminal exposure too. On the guarantee, a gérant who is asked to stand as caution for the company should treat it as the separate, personal commitment it is, negotiate its cap, duration and end, and take advice on the assets it engages given their matrimonial regime. A gérant who keeps the accounts, insures the property, stays within their powers, seeks the members' authorisation where required, acts in the company's interest, and guards their personal guarantees is a gérant who has removed most of the exposure the office carries - leaving the residual risks to be managed rather than feared.

The gérant's liability - at a glance

Frequently asked questions about the liability of an SCI gérant

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. It does not constitute legal advice. Whether a gérant is personally liable, and to whom, depends on the facts, the articles and the claimant. Always seek qualified legal advice on a gérant liability question.