SCI vs Indivision: The Two Ways to Co-Own French Property

SCI vs indivision: the two ways to co-own French property

When two or more people own French property together, the law offers two structures: undivided co-ownership (indivision) and the civil property company (société civile immobilière, SCI). They look similar in daily use - several people, one property, shared income and costs - and their day-to-day management regimes are broadly comparable. Underneath, they are built on opposite foundations. Indivision is a state, not a person: the co-owners hold the property directly, in undivided shares, and each of them can, in principle, walk away and force the whole thing to be sold. An SCI is a legal person: it owns the property, the participants own shares in it, and the exit is controlled by the company's own rules rather than by a right to demand partition.

That single difference - a state versus a person - drives every practical distinction that follows: how long the arrangement can last, how decisions are taken, what happens when one co-owner dies, how someone gets out, and what the two routes cost to set up. This guide compares indivision and the SCI on each of those axes, so that co-buyers - couples, unmarried partners, families, and investors - can see which structure fits the property they are about to hold together.

What indivision is - and why it is fragile

Indivision arises automatically whenever two or more people acquire a property together without forming a company: each holds an undivided quota - a half, a third - of the whole, not a physical part of it. The conclusion of a co-ownership agreement (convention d'indivision) does not create a legal person; the co-owners remain the direct owners of the building. That directness is indivision's virtue and its weakness at once.

The weakness is structural. The governing principle of French co-ownership is that no one can be compelled to remain in it: in an ordinary (legal) indivision, any co-owner can demand partition, and partition of a single building that will not physically divide usually means a forced sale. A co-ownership agreement can hold that instability back, but only within limits fixed by the Civil Code. A fixed-term agreement cannot exceed five years (C. civ. Art. 1873-3), renewable - and during its term no partition can be demanded except by court order for « just cause »; where a minor is involved, special duration rules apply (C. civ. Art. 1873-4). An open-ended agreement can be concluded instead, but then partition can be provoked at any moment, provided it is not done in bad faith or at an untimely moment (C. civ. Art. 1873-3, al. 2). Either way, the co-owner who wants out has a route out, and the co-owner who wants to keep the property has, at best, a five-year reprieve at a time.

The fragility is sharpest for people whose links are not marital. When unmarried partners or civil-partnership (PACS) partners buy directly, they create a conventional indivision between them. That is manageable while they cohabit - each pays the charges in proportion to their quota. But on the first death, the deceased partner's undivided half passes to their heirs, opening a new indivision, this time endured rather than chosen, between the survivor and people with whom they may share no affinity at all - any of whom can then press for partition and a sale of the home. This is the scenario the SCI was built to defuse, and the reason unmarried co-buyers so often reach for one.

What an SCI changes about co-owning

An SCI answers indivision's fragility by inserting a legal person between the co-owners and the building. From its registration at the trade and companies register, the company has legal personality of its own, with its own registered office and its own patrimony (C. civ. Art. 1842); it owns the building, and the participants own shares - movable property (C. civ. Art. 529), not a direct quota of the walls.

Three consequences follow, and each answers a weakness of indivision. First, duration: the company can be formed for up to 99 years (C. civ. Art. 1838), and within that ceiling the parties fix the term freely - the SCI can hold the property essentially indefinitely, freezing it against the hazards of partition. Second, no partition right: a shareholder cannot demand that the building be sold the way a co-owner can demand partition; the property stays put unless the collective decides otherwise. Early exit of the company is possible only by defined routes - a decision of the shareholders to dissolve, a judicial dissolution for just cause, or, where the articles so provide, the revocation of a shareholder-manager as a cause of dissolution - not by a unilateral right to force a sale. Third, survival of death: unless the articles provide otherwise, the death of a shareholder does not end the company (C. civ. Art. 1870); the shares pass to the heirs, but the company, the property and the management continue.

Set against direct co-ownership, the SCI gives up indivision's simplicity and takes on the cost of being a company: it must be formed and registered, its articles drafted, a manager appointed, and its formalism kept. It also carries the civil company's defining feature: shareholders are liable for the company's debts without limit, in proportion to their shares, after creditors have first pursued the company in vain (C. civ. Arts. 1857 and 1858). Co-owners in an indivision are likewise liable for indivision debts in proportion to their quotas; neither structure is a liability shield.

Management: how decisions get taken in indivision versus an SCI

Day to day, the two regimes run alike - which is why indivision is a genuine alternative, not merely a default to escape. Both can be run by a manager, and both reserve the heaviest decisions to the group. The differences lie in the majorities and in how much freedom the parties have to redesign them.

In an indivision, the co-owners can appoint one or more managers, chosen from among them or not, on terms all the co-owners set. A manager holds the powers the law gives each spouse over community property: they can carry out acts of ordinary administration alone - but not leases that confer a protected status on the tenant, such as a commercial lease - and any act exceeding those powers needs the unanimous consent of the co-owners (C. civ. Art. 1873-8). In the default legal indivision, without an agreement, current administration of the property requires the consent of co-owners representing two-thirds of the undivided rights (C. civ. Art. 815-3), while granting a commercial lease, and disposing of the building, require unanimity. Where no incapacitated person is involved, the parties can soften the unanimity rule by agreement - except for the disposal of the property, which stays unanimous. And where two co-owners who are the sole members of a conventional indivision fall into serious animosity, a court must appoint an administrator, without needing to inquire whether the existing manager had performed properly (Cass. civ. 13 January 1993, n° 91-12647).

In an SCI, the company has a legal representative - the manager - who, in dealings with third parties, binds the company for any act within its corporate purpose (C. civ. Art. 1849). This gives outsiders security, at the price that a shareholder cannot restrict the manager's powers as against third parties; internally, the split of powers between the manager and the meeting is fixed by the articles. This is the decisive contrast: unlike the manager of a conventional indivision, whose powers are framed by the Civil Code, the articles of an SCI have total freedom to define the extent of the manager's powers. Decisions exceeding the manager's powers should, in principle, be taken unanimously (C. civ. Art. 1852) - but in practice the articles provide for gentler rules, tailored majorities, casting votes, or reinforced thresholds. And where an incapacitated person is a shareholder, decisions are still taken according to the articles; the unanimity rule does not impose itself as it would in an indivision. The SCI's advantage here is not that it manages differently on an ordinary day, but that its rulebook is one the founders write, where the indivision's is largely one the Code imposes.

Indivision or SCI? A profile check

Pick the co-ownership situation closest to yours - the check shows which structure usually fits and the rule that decides it.

Getting out: partition in indivision versus selling shares in an SCI

The clearest practical difference between the two structures is how a participant leaves - and how easily a reluctant one can be forced out, or kept in.

Leaving an indivision is, by design, always possible. The principle that no one is bound to remain in indivision means a co-owner can demand partition; if the parties have signed a fixed-term agreement, partition is suspended for up to five years unless a court allows it for just cause (C. civ. Art. 1873-3), but the exit is never more than a term away, and an open-ended agreement leaves it available at almost any time. When a co-owner sells their undivided quota to an outsider, the other co-owners hold a pre-emption right allowing them to step into the buyer's place - a right that applies to every indivision, whatever its origin, but only to sales to third parties, not to sales between existing co-owners. A co-owner who has improved the property at their own expense is entitled to an indemnity measured by the added value (C. civ. Art. 815-13), which offsets against the occupation indemnity they owe for enjoying the property privately (C. civ. Art. 815-9).

Leaving an SCI is a matter of selling shares, and that is harder in both directions - and that is deliberate. Shares are not negotiable instruments; they transfer by written deed, and a transfer to an outsider passes through the approval procedure in the articles. That illiquidity works both ways: it protects the remaining participants from having a stranger forced upon them, but it can trap a minority shareholder who wants out, since the shares of a family SCI have effectively no market and can be worth less than the matching slice of the property. The founders therefore design the exit deliberately - approval clauses, pre-emption between shareholders, buy-out mechanics, and the statutory withdrawal right - where the indivision's exit is largely handed to it by the Code. The trade is liquidity for stability: indivision lets anyone leave and therefore lets anyone destabilise; the SCI locks the property down and therefore locks participants in.

The death of a co-owner: where indivision and the SCI part company

If one comparison decides the choice for most families, it is this one. In indivision, a death is a rupture. On the death of a co-owner - say a parent - a new indivision opens between the heirs, and, where a spouse survives with rights in ownership, between those heirs and the surviving spouse; it covers the property as it does the rest of the estate. Any of those new co-owners can ask to leave and demand partition. A single building rarely divides cleanly, so partition often means selling, or carving the property into lots through a division deed and a co-ownership regulation where that is technically feasible. The people the deceased co-owned with are, from the moment of death, people the survivors did not choose.

In an SCI, a death is a continuation. The company is not dissolved (C. civ. Art. 1870); the property never enters the estate, because the property belongs to the company - what enters the estate is the deceased's shares. The heirs can claim rights over those shares, but the articles decide what that means: they can subject the heirs to an approval procedure, or provide that the company continues with the surviving shareholders alone, with excluded heirs compensated for the value of their shares. The manager the founders appointed - often with a clause passing the office automatically to a chosen successor on death - keeps running the property. This is the mechanism families buy an SCI for: it converts the shock of a death from a trigger for forced sale into an orderly transfer of shares under rules written in advance.

The contrast is at its sharpest for unmarried and PACS couples, precisely because they lack the succession protections marriage confers. Holding the home in indivision exposes the survivor to co-ownership with the deceased's family and to a partition demand; holding it in an SCI lets the couple engineer the survivor's position in the articles - automatic management succession, an approval clause against the heirs, a lease securing occupation, and, where suitable, a cross-usufruct or tontine structure. The property is organised and frozen in time, up to the company's 99-year life, instead of being exposed to the accidents of partition.

Tax at the outset: indivision versus setting up an SCI

The two routes also diverge at the moment they are created, and the difference runs in indivision's favour. Forming an indivision is fiscally light: there is no duty specific to indivision, and no capital gain arises, because the birth of an indivision is not a transfer of property. Where the co-owners sign a co-ownership agreement covering real estate, the fixed duty on unnamed deeds is, in principle, charged, and land-registration tax becomes due at 0.715 % (including assessment costs) on the property covered.

Setting up an SCI that will hold an already-owned property is heavier, because putting the property into the company is a genuine transaction. Contributing a building to an SCI is a sale and a transfer of ownership from the contributor's personal patrimony into the company's (C. civ. Art. 1843-3); the tax authority draws the financial consequences of that transfer, and can tax a capital gain even though the contributor receives shares rather than a price. An SCI formed to buy a property with cash the shareholders subscribe or lend avoids the contribution gain, but still carries incorporation formalities and costs the indivision does not. This front-loaded cost is part of the trade: indivision is cheaper to enter, the SCI more expensive but more durable and more governable once inside. The tax mechanics of moving an owned property into an SCI are set out in our dedicated guide.

Once running, the two are taxed alike on the income side. An SCI that has not opted for company tax is fiscally transparent: each shareholder is taxed on their share of the rental profit as property income (CGI Art. 8), exactly as each co-owner in an indivision is taxed on their quota. And on a later sale, both use the private capital-gains regime with the same holding-period exemptions - full exemption from income tax at 22 years and from social levies at 30 (CGI Arts. 150 U and 150 VC). The recurring tax bill is not, in itself, a reason to prefer one structure over the other; the reasons lie in governance, duration, exit and succession.

SCI vs indivision: which deadlock are you trying to avoid?

Most co-ownership disputes fall into a handful of patterns. Pick the one you fear most - the check shows how each structure handles it.

SCI vs indivision: side by side

Frequently asked questions about SCI vs indivision

This article is for general information only and states French law as published in the sources available at the date shown above. It does not constitute legal or tax advice. The choice between indivision and an SCI depends on the co-owners, the property, the intended horizon and the succession plan. Always seek qualified legal advice - and coordinate with the notary handling the purchase or the contribution - before deciding how to co-own French property.