SCI and divorce: How to manage real estate during a separation?

SCI and divorce often represent a challenge for separating couples, especially when the division of assets includes a Société Civile Immobilière. Used by many couples to manage and transfer their real estate assets, the SCI facilitates the management of joint assets but introduces particular complexities during a divorce, in particular for the division of shares and the administration of the marital home. What are the rights of each spouse in an SCI in the event of divorce? What steps can be taken to share this asset without protracted conflicts? In this guide, we explore the legal, tax and asset implications of an SCI during a separation and propose options to better manage this situation.

The SCI: A special framework for the couple’s real estate assets

The Société Civile Immobilière (SCI) is a legal structure that allows several people, often members of the same family or partners, to manage a property jointly. It operates like a company: each partner holds shares proportional to their contribution, which facilitates the distribution of profits or expenses. For many couples, the SCI is an ideal solution for structuring and securing their real estate assets. Not only does it simplify the coordination of assets, but it also makes it possible to optimize taxation on property income , depending on the tax options chosen by the partners.

Why do couples choose SCI?

The advantages of the SCI for couples are numerous. First of all, it avoids joint ownership, which can be problematic in the event of a marital split, because assets held jointly are generally more difficult to share. Thanks to the SCI, the management of company shares is simplified, and the partners can decide to acquire or sell their shares according to terms set out when the company was created. This reduces the risk of blockages in the organization of assets. In addition, the SCI facilitates the transfer of real estate assets to children, because parents can gradually transfer their shares, allowing for a supervised transfer of family assets.

The SCI and the marital home: a complex situation

In the event of divorce, the SCI, which has advantages during periods of agreement, can become an obstacle. When property is held jointly within an SCI, the sharing is not as simple as a classic breakdown of property. This is all the more complicated if the real estate is the marital home, because it involves emotional and financial issues for both parties. The legislation on the marital home requires that the rights of each spouse be taken into account, which can lengthen the timeframes and make the sharing delicate.

The strict rules of the SCI: a brake in the event of separation

The SCI follows strict legal and tax rules, which complicates the division of shares in the event of divorce. The couple's matrimonial regime, whether it is legal community or individualization of property, directly influences the distribution of shares. The partners must therefore go through a well-defined procedure, and in some cases, the repurchase of shares by one of the spouses can be costly and complex. It is also common to call upon an expert to assess the value of the shares and ensure a fair distribution. These steps can not only prolong the divorce procedure, but they can also lead to additional costs, particularly if the use of a lawyer or notary is necessary.

SCI and divorce: the legal and patrimonial implications

The SCI and divorce raise many legal and property issues, which can make the division of property complex. When a married couple owns an SCI, each partner holds shares representing their rights in the company, rather than direct rights to the real estate itself. In the event of a breakup, it becomes essential to determine how these shares will be distributed, which may depend on the matrimonial regime under which the spouses were united.

The matrimonial regime and its effects on the SCI

The division of shares depends on the couple's matrimonial regime. Under the community property regime, the shares of the SCI acquired during the marriage are generally considered to be joint property. This means that, even if only one spouse financed the acquisition, the shares can be divided between the two at the time of divorce. On the other hand, if the couple is married under the disparity of property regime, each spouse in principle keeps their own shares, which are not subject to division. These distinctions considerably influence the rights of each spouse and can sometimes be a source of tension, especially if one of them has invested more than the other in the SCI.

The marital home within the SCI: a particular issue

When the real estate held by the SCI constitutes the marital home, the situation becomes more complex. The judge may then decide to take this element into account to protect the interests of each spouse, particularly if the couple has children. For example, the judge may temporarily assign the use of the property to one of the spouses to allow them to continue living there with the children. This decision aims to prevent one of the spouses from being disadvantaged, especially if they have no other immediate housing solutions.

Management and modification of the SCI in the event of divorce

Divorce also affects the management of the SCI itself. If one of the spouses wishes to leave the SCI, they have the right to sell their shares, whether to the other partner or to a third party. However, this sale is subject to the rules set out in the company's statutes. In general, the statutes provide for an approval procedure, i.e. the approval of the other partners at a general meeting, before the transfer of the shares. This step can lengthen the divorce process and requires organization. In addition, amendments to the SCI's statutes may be necessary to adjust the governance and rights of the remaining partners. These changes result in notary and administrative fees, which are added to the costs of the divorce.

Possible options for sharing an SCI during a divorce

In the event of a divorce involving a civil property company, several options are available to allow spouses to divide up the shares and decide on the future of the joint real estate. These options are adapted to the financial situation and objectives of the former spouses, but they also have tax and administrative implications. Here are the three main possible solutions:

Dissolution of the SCI: End of the company and sale of the real estate

The first option is to dissolve the SCI, which results in the sale of the real estate . This solution is often preferred when both spouses no longer wish to be bound by the management of the SCI or do not have the resources to keep the company in business. The dissolution of the SCI marks the end of the company and leads to the liquidation of the assets.

However, this option has several important tax and financial consequences. The sale of the property may be subject to capital gains tax, particularly if the value of the property has increased since its acquisition. Notary fees are also added to the costs of this dissolution, not to mention any possible supervision costs to finalize the procedure.

Furthermore, a dissolution can result in a loss of value if the sale is carried out urgently, with an impact on the sale price. It is therefore an option to consider if neither spouse wishes to keep the property or if the sale allows the settlement of any debts of the SCI.

Purchase of shares by a former spouse: Keep the SCI by changing partners

An interesting alternative is for one of the spouses to buy back the shares of their former partner. This solution allows the SCI and the real estate to be preserved, while separating the interests of the two former spouses. To do this, the spouse wishing to keep the property must buy back the shares of their former spouse, who then withdraws from the company.

The redemption of shares requires a prior estimate of their value, in order to determine the amount to be paid for the transfer of ownership. This estimate can be carried out by a real estate expert or a notary, who will take into account the value of the property, market developments, and the state of the SCI. The procedure is carried out before a notary, which guarantees its legality and transparency.

This solution is ideal if one of the spouses is particularly attached to the property or if they wish to make it their main residence. However, the repurchase of the shares requires having the necessary funds to finance the purchase, or obtaining a loan to cover the cost of this acquisition.

Sale of the property held by the SCI: Transfer of shares or of the property itself

The last option is to sell the property without dissolving the SCI . The two ex-spouses can then decide to put all of the shares up for sale or to sell the property directly. In the case of the sale of the shares, the potential buyer will have to be ready to join the SCI and respect its statutes, which can complicate the sale process.

Selling the property without dissolving the SCI can be advantageous from a tax perspective, particularly if the former spouses wish to avoid the tax linked to the dissolution. However, the transfer of shares involves specific formalities and requires an agreement between the two parties. It is often necessary to obtain the authorisation of the general meeting of the SCI to proceed with the sale, depending on the rules set out in the company's statutes.

This solution is interesting when both spouses want to separate from their joint assets without taking charge of the dissolution of the SCI. But it remains complex, particularly in finding a buyer who accepts the constraints of the SCI.

The choice of one of these options depends on the needs and resources of each spouse, as well as the tax and legal constraints specific to each situation. While the dissolution of the SCI allows the company to be closed, it can result in high tax costs. The repurchase of the shares is a viable alternative to retain the property, but it requires adequate financing. Finally, the sale of the shares or the property itself offers an intermediate solution for ex-spouses wishing to transfer their assets while preserving the structure of the SCI.

Tax aspects to consider

The separation of spouses who hold an SCI involves tax aspects that are crucial to understand in order to avoid unforeseen costs. One of the main issues is the tax on real estate capital gains in the event of the sale of the property held by the SCI or its dissolution. If the SCI has owned the property for several years, the amount of the capital gain can be significant, especially in a context of rising real estate prices.

The influence of the matrimonial regime on taxation

The matrimonial regime also influences the tax aspects of the division of shares. Under the community property regime, the distribution of shares may result in transfer taxes depending on the value of the shares redeemed. On the other hand, for spouses married under a separation of property regime, the shares held before the marriage are considered separate property and are not subject to division.

Taking into account donations between spouses

Finally, donations made between spouses during the marriage, in particular to finance the purchase of shares in the SCI, must be taken into account. These donations may give rise to sharing rights in the event of separation, according to the terms specified in the statutes of the SCI. Calling on a notary or a lawyer specializing in divorce and SCI taxation is recommended to manage these aspects optimally.

Practical advice for managing the SCI during a divorce

Faced with the challenges that an SCI represents during a divorce, it is crucial to take certain precautions to avoid conflicts. Consulting a notary or a specialized lawyer from the beginning of the process can be essential. These experts can advise spouses on the sharing options and the legal consequences of each choice.

A useful precaution is to provide, from the creation of the SCI, suitable statutes in the event of separation. For example, the statutes may include a clause for the repurchase of shares in the event of divorce or a procedure facilitating the transfer of shares to the other spouse. In addition, for couples considering creating an SCI , it is often recommended to opt for a separation of property regime. This regime allows for a simplified organization of the company shares and prevents the distribution from becoming an obstacle in the event of separation.

It is also advisable to inform children or potential heirs of the situation of the SCI, especially if it was created for the purpose of transferring assets. The proper coordination of the SCI is based on clear communication between the partners and on decisions taken in consultation, even during periods of separation.

Conclusion

The SCI and divorce is a complex combination that requires a methodical and informed approach. The legal, tax and property implications of an SCI in the event of separation require spouses to make mature decisions, taking into account their respective rights to the shares. It is essential to anticipate these situations, ideally from the creation of the SCI, by drafting suitable statutes and opting for a matrimonial regime conducive to more flexible management in the event of separation. Consulting legal and tax professionals makes it possible to manage the specific issues related to the SCI marital home and to preserve the interests of each party as much as possible.