SCI or joint ownership: which should you choose to buy with others?
Joint ownership is simple and free but unstable: any co-owner may demand the division at any time (Article 815 of the French Civil Code) and selling requires unanimity. An SCI costs money to create and run, but its articles durably organize decisions, exits and transmission. The right choice depends on the project's duration and purpose.
Two opposing logics
Joint ownership is a statutory regime that applies by default: it exists as soon as two people buy or inherit together, with no formality or cost. The SCI is a purpose-built legal entity: it requires articles of association, registration and ongoing management, but it lets you write your own rules. Comparing the two comes down to weighing immediate simplicity against long-term stability.
The comparison point by point
Formation: joint ownership is automatic and free, whereas an SCI requires articles of association, a legal notice and registration, for a few hundred euros. Day-to-day decisions: in joint ownership they require a two-thirds majority of the rights (Article 815-3 of the French Civil Code); in an SCI the manager acts alone within the limits of the corporate purpose. Selling the property: unanimity of the co-owners in joint ownership; in an SCI, it depends on the articles, either an authorized manager or the majority they provide for.
Exit of a member: in joint ownership the division may be demanded at any time (Article 815); in an SCI, shares are transferred subject to approval (Article 1861) or the partner exercises a right of withdrawal (Article 1869). Stability of the arrangement: weak in joint ownership, where anyone can bring everything to a halt; strong in an SCI, which survives disagreements and deaths. Transmission: an undivided share is unwieldy to pass on, whereas an SCI allows the progressive gifting of shares and makes split ownership easier. Running costs: none in joint ownership; accounting, an annual general meeting and formalities in an SCI.
| Criterion | Indivision | SCI (property holding company) |
|---|---|---|
| Setting it up | Automatic and free | Articles, statutory notice, registration (a few hundred euros) |
| Day-to-day decisions | Two-thirds majority of the rights (Article 815-3 of the Civil Code) | The manager acts alone within the company's stated purpose |
| Selling the property | Unanimity of the co-owners | As set by the articles: an authorised manager or the majority provided for |
| A member leaving | Division can be demanded at any time (Article 815) | Transfer of shares subject to approval (Article 1861), or withdrawal (Article 1869) |
| Stability of the arrangement | Low: any one person can stop everything | High: the company outlives disagreements and deaths |
| Passing it on | An undivided share, awkward to handle | Gradual gifts of shares, and splitting ownership is straightforward |
| Running costs | None | Accounts, an annual meeting, filings |
Indivision and SCI: the key differences
When joint ownership is enough
For a married couple buying their main home, the matrimonial property regime already provides most of the organization, and joint ownership or community property remains the natural framework. It also suits short-term projects and low-value assets, for which the costs of an SCI are not justified. The joint ownership agreement of Articles 1873-1 et seq. of the French Civil Code offers a useful middle ground: appointing a manager, setting the allocation of expenses and stabilizing the joint ownership for a maximum renewable term of five years.
When the SCI prevails
The SCI takes the lead as soon as the project is long term or involves several generations: progressive transmission of shares with tax allowances, retention of management powers by the parents as managers, protection of a surviving unmarried partner through tailored clauses in the articles, holding of a family rental portfolio. It neutralizes the most dangerous rule of joint ownership: everyone's right to demand the division at any time, which can force the sale of the property at the worst moment.
The choice is never automatic, though. A poorly run SCI (general meetings never held, no accounts, assets mixed together) loses much of its advantages and invites challenges from the tax authorities as well as from creditors. Nor is the SCI a tax-saving tool in itself: under income tax, rental income is taxed exactly as it would be if the property were held directly.
Frequently asked questions
Do banks lend more easily to an SCI?
No. The loan is assessed on the partners' income and down payment, in practice with their personal guarantees. The SCI does not increase borrowing capacity; it only organizes how the property is held and how rights are allocated.
Can a joint ownership be converted into an SCI?
Yes, by contributing the jointly owned property to an SCI formed between the co-owners. The operation requires everyone's agreement, a notarial deed and land registration; for tax purposes, the contribution is treated as a disposal and may generate a taxable property capital gain for each contributor.
What about couples in a civil partnership or living together?
Joint ownership protects the survivor poorly, as partners do not inherit from each other without a will. The SCI makes it possible to arrange this protection, for example through a cross-holding of usufruct and bare ownership of the shares; a notary's advice is essential to choose between a will, a tontine clause and an SCI depending on the situation.
Does a joint ownership agreement replace an SCI?
Partially. It allows the appointment of a manager and stabilizes the joint ownership for renewable five-year terms (Articles 1873-1 et seq. of the French Civil Code), but it creates no legal entity and facilitates neither progressive transmission nor long-term holding.
Read next
- Code civil, articles 815 et 815-3 (Légifrance)
- Code civil, articles 1832, 1861 et 1869 (Légifrance)
- Code civil, articles 1873-1 à 1873-3 (Légifrance)
- Service-Public.fr : Achat d'un logement en indivision
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