Many non-residents who buy property in France are advised at some point to purchase it through a société civile immobilière (a civil real-estate company, commonly abbreviated as SCI) rather than in their own name. The advice is often well-intentioned, but it frequently rests on a misunderstanding of what a French SCI actually is. It is not a limited-liability vehicle in the sense of an English limited company or a US LLC, and it does not shelter its shareholders from the debts of the company. It is a tool of civil law, created by the article 1845 of the Code civil, whose advantages and risks are strictly framed by the statutes (statuts) and by a well-settled body of case law from the Cour de cassation.
This guide explains, from the perspective of a foreign buyer based in the United Kingdom, the United States or Australia, how an SCI is formed, what it can and cannot do, how shares are transferred, and how the company is run, sold and wound up. It draws exclusively on the provisions of the French Code civil and on decisions of the third civil chamber of the Cour de cassation rendered since 2023. Tax considerations are flagged where they explain why foreign investors choose the vehicle, but they are not developed here: structuring advice must always come from a tax adviser or an accountant who knows both your country of residence and French law.
I. What an SCI Is and Why Foreign Buyers Use It
A. A Civil Company Whose Purpose Is Real Estate
The SCI is the archetypal French civil company. Under article 1845 of the Code civil, the provisions of the chapter on civil companies apply to every company to which the law does not attach a commercial character: « Les dispositions du présent chapitre sont applicables à toutes les sociétés civiles, à moins qu’il n’y soit dérogé par le statut légal particulier auquel certaines d’entre elles sont assujetties » (« The provisions of this chapter apply to all civil companies, unless a particular legal status imposes specific rules on some of them »). The SCI is the most common such company: its object (objet social) is confined to the acquisition, ownership, management, rental and, in certain configurations, the construction and resale of real estate. Because its object is not commercial, the company itself is not a commerçant and is not subject to commercial courts for its own activities, although it is still registered on the registre du commerce et des sociétés (RCS).
For a foreign buyer, the mechanics of incorporation are straightforward. There is no minimum share capital: the statutes simply define a nominal amount, often a few hundred or a few thousand euros, divided into shares (parts sociales) attributed to the shareholders (associés). At least two shareholders are required unless the statutes are drawn up before a notaire, in which case a single-person SCI (SCI unipersonnelle) is permitted. Foreign nationals, including non-EU nationals, may hold shares and act as manager (gérant) of an SCI without any residence permit requirement, provided the registered office (siège social) is in France. The company is then published in a legal announcements journal and registered with the RCS; the property is acquired in the name of the SCI, which becomes the owner of the asset while the shareholders own only shares.
This separation between the company’s assets and the shareholders’ wealth is the foundation of most planning strategies. Buying through an SCI means that, on a later disposal, the seller can choose between selling the property itself or selling the shares in the company that owns it. A share sale may avoid certain transfer taxes that attach to a direct property sale, and it also allows the shareholders to pass the business on progressively by donating shares during their lifetime, a technique frequently combined with nue-propriété (bare ownership) and usufruit (life interest). For several buyers acquiring a single property together, an SCI is also a way to organise their rights by contract rather than through the default rules of indivision (joint co-ownership between individuals), which are rigid and can lead to deadlock: the statutes can provide for majority voting, exit mechanisms and transfer restrictions that no co-owner can impose on the others.
B. What an SCI Can and Cannot Achieve
The most dangerous misconception is that the SCI limits the personal liability of its shareholders. It does not. The shareholders of a French civil company are personally liable for the company’s debts, without limit, in proportion to their share of the capital at the time the debt becomes due. Article 1857 of the Code civil states the rule plainly: « A l’égard des tiers, les associés répondent indéfiniment des dettes sociales à proportion de leur part dans le capital social à la date de l’exigibilité ou au jour de la cessation des paiements » (« As against third parties, the shareholders answer without limit for the company’s debts in proportion to their share in the capital at the date the debt falls due or payments cease »). If the SCI borrows to buy the property and the loan cannot be repaid, or if a tenant sues and obtains judgment against the SCI, each shareholder can be pursued personally. The only mitigation is article 1858, which gives shareholders a benefit of discussion: « Les créanciers ne peuvent poursuivre le paiement des dettes sociales contre un associé qu’après avoir préalablement et vainement poursuivi la personne morale » (« Creditors may not pursue a shareholder for the company’s debts until they have first pursued the company itself without success »). In practical terms, this means the lender or creditor must first seize the SCI’s assets and obtain a judgment against the company; only if recovery fails can it turn to the shareholders. It is a procedural protection, not a ceiling on liability.
The Cour de cassation has confirmed that this exposure survives the sale of the shares. In Cass. 3e civ., 6 June 2024, no. 23-10.526, a bank sued the former shareholders of an SCI that had defaulted on a €437,000 loan after they had transferred their shares in 2014. The court of appeal had dismissed the claim on the ground that the bank had not pursued the SCI before the transfer; the Cour de cassation quashed that ruling, holding that « les anciens associés d’une société civile demeurent débiteurs des dettes sociales à proportion de leur part dans le capital social à la date de leur exigibilité » (« former shareholders of a civil company remain liable for the company’s debts in proportion to their share at the date the debts fall due »). For a foreign seller who believes that handing over the shares discharges him from the company’s liabilities, this decision is a direct warning: the exit must be accompanied by express releases and, where possible, the settlement or refinancing of outstanding debts, because the liability of the seller under article 1857 cannot simply be transferred away.
Similarly, the manager of an SCI is not an « officer » whose mistakes are automatically borne by the company. Article 1850 makes the gérant personally liable to the company and to third parties for breaches of the law or the statutes and for faults committed in the course of management, but the Cour de cassation has consistently held that third parties can only rely on this personal liability where the manager has committed a fault separable from his functions. In Cass. 3e civ., 19 March 2026, no. 24-13.829 (FS-B), buyers of a chalet in a two-lot copropriété (co-ownership) created by an SCI challenged the boundaries fixed by the SCI’s plans, drawn up by its own manager without a certified surveyor, and sought to hold the manager personally liable. The Cour de cassation rejected the claim, restating that « la responsabilité personnelle d’un dirigeant de société civile ne peut être retenue à l’égard d’un tiers que s’il a commis une faute séparable de ses fonctions » (« the personal liability of the manager of a civil company can only be engaged towards a third party if he has committed a fault separable from his functions »). In that case, the manager had acted within the scope of his office, and the SCI had long since been dissolved and liquidated, so the buyers’ recourse lay against the company’s rights-holders, not against the manager’s personal estate.
Finally, the fiscal profile of the SCI explains both its popularity and its limitations. By default, the SCI is a fiscally transparent vehicle: profits and rents are taxed in the hands of the shareholders, in proportion to their shares, under the income-tax regime applicable to each of them. Foreign shareholders are therefore directly exposed to French personal income tax on the rental income of a French property, subject to the double-taxation treaty between France and their country of residence. Where the shareholders elect to be taxed as a company, or where the SCI carries on a commercial activity such as property development, corporate tax applies instead. Two further French rules affect non-resident investors in particular: the annual 3% tax on the market value of French real estate held by foreign entities (with a reporting mechanism under French law, extended in 2026 to a wider range of foreign-owned structures), and the obligation to appoint a French tax representative. None of these considerations can be resolved by the legal structure alone; they depend on the nationality and residence of each shareholder. This article therefore confines itself to the civil-law mechanics of the SCI and flags the fiscal issues only so that the reader raises them with his advisers before signing anything.
II. Buying, Managing and Passing On the Company: The Legal Mechanics
A. Acquiring and Transferring Shares: Formalities, Approval and Enforcement
Shares in an SCI are not freely transferable by default. Article 1861 of the Code civil provides that « Les parts sociales ne peuvent être cédées qu’avec l’agrément de tous les associés » (« Shares may only be transferred with the approval of all the shareholders »), subject to the statutes, which may substitute a majority of their choice, may confer approval on the managers, and may dispense with approval for transfers to a shareholder’s spouse, ascendants or descendants. When a foreign family acquires a French property through an SCI, it is therefore essential to check the statuts before any internal restructuring: a transfer to a child, or to the trust or holding company used for succession planning, may be invalid if the required approval has not been given, and the buyer may remain outside the company whatever the parties intended.
The transfer itself must be recorded in writing. Article 1865 provides: « La cession de parts sociales doit être constatée par écrit » (« The transfer of shares must be recorded in writing »), and adds that the transfer is only enforceable against the company once it has been notified or entered in the company’s registers, and only enforceable against third parties after publication on the RCS. The Cour de cassation has nonetheless made clear that the written deed is a matter of proof, not of validity. In Cass. 3e civ., 4 July 2024, no. 23-10.534, a shareholder who denied having signed the 2009 deed transferring his 45 shares in the SCI Canala was held to have validly disposed of them on the strength of a later written acknowledgment: the Court approved the finding that « l’exigence d’un écrit constatant la cession de parts sociales, prévue à l’article 1865 du code civil, n’était pas une condition de validité de la cession des parts sociales, valablement formée par l’échange des consentements » (« the requirement of a written deed recording the transfer of shares, laid down by article 1865, is not a condition of validity of the transfer, which is validly formed by the exchange of consents »). The consequence cuts both ways: an oral agreement may bind the parties, but the party who claims a transfer bears the burden of proving it, and in the absence of a written deed, disputes over whether, when and at what price the shares were transferred can drag on for years.
The corollary is that a deed signed by the wrong person has no effect at all. In Cass. 3e civ., 13 November 2025, no. 23-19.559, a bank had lent to an SCI against the personal guarantees of the new shareholders; when the company failed, the alleged purchasers proved, through a handwriting examination, that the share-transfer deed and the guarantee had not been signed by them. The Cour de cassation upheld that « l’acte de cession des parts sociales de la SCI n’ayant pas été signé par les prétendus cessionnaires, il était privé d’effet » (« the share-transfer deed, not having been signed by the alleged purchasers, was devoid of effect »). For a foreign purchaser, this is a practical checklist in itself: the transfer deed must be signed by all parties in person or through a valid power of attorney (a procuration drawn up under the conditions required by French law, often before the notary or the local French consulate), the signatures must correspond exactly to the identity documents, and the deed must be registered and published. Skipping the formalities may not make the transfer void, but it makes it unenforceable, unprovable, or both.
Foreign vehicles acquire French SCIs every day through share deals, and the Cour de cassation treats these transactions as ordinary contracts subject to their conditions. In Cass. 3e civ., 28 May 2025, no. 23-18.520, a Swiss SCI (« Le Mirador ») had undertaken, under a promesse de cession de parts sociales (share-purchase promise) subject to conditions suspensives, to acquire the capital of two French SCIs holding a planning permission; when a condition was not fulfilled by the deadline, the Swiss company terminated the ancillary building contracts and invoked the resolutory clauses. The contractors argued the termination was abusive, but the Cour de cassation confirmed that « la condition résolutoire prévue aux conventions devait recevoir application » (« the resolutory condition provided for in the agreements had to be applied »). Two practical lessons for the foreign buyer: first, the share-deal route is fully recognised by French law, including for non-French entities; second, every link in the chain — the share-purchase promise, its conditions, and the contracts signed in anticipation of completion — must be drafted coherently, because a failure to satisfy a condition suspensive will be enforced literally and will unwind the whole operation.
B. Running the SCI, Selling Its Property and Winding It Down
Once the SCI owns the property, its life is governed by the statutes and by the general law of civil companies. One recurring misunderstanding is that selling the company’s only asset automatically dissolves it. In Cass. 3e civ., 19 September 2024, no. 22-18.687 (FS-B), a shareholder claimed that the extraordinary general meeting of October 2017, which had approved the sale of the SCI Gounod’s only real estate and rejected the resolution to reinvest the proceeds, had necessarily dissolved the company. The Cour de cassation held that it had not: the sale of the asset did not by itself trigger dissolution, which requires a decision of the shareholders, and the rejection of a reinvestment resolution was not such a decision. The case is also instructive on the distribution of the sale proceeds where shares are split between nue-propriété and usufruit, a common arrangement in French succession planning: the Court ruled that « La distribution, sous forme de dividendes, du produit de la vente de la totalité des actifs immobiliers d’une société civile immobilière affecte la substance des parts sociales grevées d’usufruit » (« distributing the proceeds of the sale of all of a real-estate company’s assets as dividends affects the substance of shares burdened with a life interest »), with the result that such dividends accrue to the bare owner rather than the life tenant, whose enjoyment then takes the form of a quasi-usufruct over the sums received. Foreign families using an SCI for intergenerational planning should take note: the split between bare ownership and life interest, so useful during life, produces surprising results at the moment the property is sold, and the statutes should address the allocation of sale proceeds expressly.
Where the SCI is the seller of the property, it is bound by the seller’s warranties like any other vendor, and it cannot shelter behind its corporate form. Under article 1643 of the Code civil, « Il est tenu des vices cachés, quand même il ne les aurait pas connus, à moins que, dans ce cas, il n’ait stipulé qu’il ne sera obligé à aucune garantie » (« The seller is liable for hidden defects even if it did not know of them, unless in that case it stipulated that it would not be bound by any warranty »). In Cass. 3e civ., 26 March 2026, no. 24-14.523, an SCI which had bought land that proved to be non-buildable and difficult to access sought the avoidance of the sale and, in the alternative, its resolution for vices cachés (hidden defects). The court of appeal had dismissed the claim because the seller had not known of the defects; the Cour de cassation quashed the decision, recalling that the seller’s ignorance is irrelevant unless the deed contains a valid clause excluding warranty. The same logic applies when the SCI itself is the vendor: a professional seller that carries out work before reselling is presumed to know the defects, and a buyer can invoke vices cachés notwithstanding the absence of bad faith. Foreign buyers who purchase from an SCI that renovated the property — and foreign sellers who use an SCI for flipping operations — must therefore treat the hidden-defect warranty as one of the central risks of the transaction, alongside the mandatory technical diagnostics.
If the SCI acts as developer or builder-owner, the ten-year warranty applies. Article 1792 of the Code civil provides: « Tout constructeur d’un ouvrage est responsable de plein droit, envers le maître ou l’acquéreur de l’ouvrage, des dommages, même résultant d’un vice du sol, qui compromettent la solidité de l’ouvrage ou qui, l’affectant dans l’un de ses éléments constitutifs ou l’un de ses éléments d’équipement, le rendent impropre à sa destination » (« Any builder of a structure is liable as of right, towards the owner or purchaser of the structure, for damage, even arising from a defect in the soil, that compromises the solidity of the structure or renders it unfit for its purpose »). The Cour de cassation applies this liability only to damage attributable to the works the defendant actually carried out or had carried out. In Cass. 3e civ., 19 December 2024, no. 23-15.039, an SCI had converted an old stud farm into dwellings and sold them off-plan; years later, the syndicat des copropriétaires (co-ownership body) sued the SCI, its insurer, the architects and the main contractor for widespread roof infiltration. The Court quashed the finding of decennial liability because the court of appeal had not established that the damage was attributable to the works performed, rather than to the pre-existing structure. The case also illustrates the after-life of a dissolved SCI: the company had been dissolved, struck off the RCS, and its liquidating shareholder was pursued personally in that capacity. The liquidation of an SCI does not extinguish the statutory warranties; it transfers them to the liquidator and ultimately to the shareholders, who, under article 1857, remain answerable for the company’s liabilities.
Finally, an SCI that lets its property is a landlord like any other, bound by the landlord’s core duties. Article 1719 of the Code civil provides that « Le bailleur est obligé, par la nature du contrat, et sans qu’il soit besoin d’aucune stipulation particulière : 1° De délivrer au preneur la chose louée et, s’il s’agit de son habitation principale, un logement décent » (« The landlord is bound, by the nature of the contract and without any specific clause, to deliver the leased thing to the tenant and, where it is the tenant’s main home, a decent dwelling »). In Cass. 3e civ., 10 July 2025, no. 23-20.491 (FS-B), a tenant sought the termination of its lease after its landlord SCI had reduced the leased area by building a hangar and car park over a third of it and blocking access; the Court confirmed that the landlord’s duty to deliver and ensure peaceful enjoyment is a continuing obligation, so that the limitation period for a claim based on its breach only starts when the breach ceases, not when the tenant first discovered the reduction. For a foreign landlord holding a French property through an SCI, the lesson is that the company’s obligations to its tenants cannot be managed from a distance: non-compliant alterations, unmaintained common areas or an indecent dwelling will generate claims that may lead to the termination of the lease, to rent reductions, and — because of article 1857 — ultimately to the personal exposure of the shareholders.
The interplay between the decency rules and the collection of rent is illustrated by Cass. 3e civ., 14 December 2023, no. 22-23.267 (FS-B). The SCI Amphora, landlord of a dwelling, had received housing allowance directly and claimed the arrears from the tenant after the benefit was suspended because the dwelling was unfit. The Cour de cassation quashed the award: where the housing-fund body withholds the allowance because the dwelling is not decent, « le locataire s’acquitte du montant du loyer et des charges récupérables diminué du montant des allocations de logement » (« the tenant pays the rent and recoverable charges reduced by the amount of the housing allowance »), and the partial payment cannot be treated as default. Foreign owners who let through an SCI often assume that rent collection is a purely commercial matter; in France, the condition of the dwelling directly affects the amount the landlord may lawfully claim, and an unfit property can also expose the SCI to penalties, to an order to carry out works, and to the suspension of the rent under the law of 6 July 1989 on residential leases.
Conclusion
The société civile immobilière remains one of the most useful instruments of French real-estate law for foreign buyers, provided it is understood for what it is. It organises ownership between several people by contract, it facilitates the transfer of wealth through shares rather than through the property itself, and it offers flexibility in succession planning through the combination of shares, bare ownership and life interest. It does not, however, cap the liability of its shareholders: under articles 1857 and 1858 of the Code civil, each shareholder answers personally, without limit, for the company’s debts, and the Cour de cassation has confirmed that this exposure survives the transfer of the shares. The manager is personally liable only for a fault separable from his functions, but the company — and through it the shareholders — remains subject to the full weight of the seller’s hidden-defect warranty, the builders’ decennial liability and the landlord’s obligations towards its tenants.
For a buyer based abroad, the practical steps are therefore the following. First, take advice before incorporation on the choice between buying in your own name, in indivision, or through an SCI, and on the fiscal consequences in France and in your country of residence; the SCI is a tool, not an end in itself. Second, have the statutes drafted with the management and exit rules you actually need: the statutory default of unanimous approval for share transfers can be amended, but only by the statutes themselves. Third, when acquiring shares in an existing SCI, obtain the statutory approval where required, sign the deed in person or by a valid power of attorney, register it and publish it on the RCS, and ask the seller to confirm in writing the state of the company’s debts — remembering that the confirmation will not release the seller, only the diligence of your advisers will protect you. Fourth, before selling the property through the SCI, check the statutes on the distribution of the proceeds where shares are split between bare ownership and usufruct, and verify whether the warranties given to purchasers — for hidden defects, for decennial damage — can be covered by the company’s insurance, since the dissolution and liquidation of the SCI will not extinguish them. Finally, if the property is let, treat the management of the tenancy with the same care as the acquisition itself: the decency of the dwelling and the landlord’s continuing duties condition both the rent that can lawfully be claimed and the risk of litigation.
None of these steps requires you to act alone. French real-estate lawyers assist non-resident buyers and owners at every stage of the life of an SCI — incorporation, share transfers, the sale of the property, disputes with tenants or co-owners, and the winding up of the company. Our real-estate team advises English-speaking clients in English, in Paris and throughout France, on the civil and procedural aspects of holding French property through an SCI, and coordinates with the notaire, the accountant and the tax advisers who complete the advisory team. The firm’s practice covers the purchase and sale of French real estate, co-ownership law, leases, construction warranties and boundary disputes; a review of your proposed structure before you commit, or of an existing SCI before you transfer shares, is often the least expensive part of the transaction — and the one that prevents the most litigation.
Send the documents of your case to the firm. Maître Reda KOHEN replies personally within 24 hours with an initial strategic review. Consultations are available in English.