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PROPERTY LAW
Types of ownership
Freehold
Ownership
• French Civil Code defines ownership as the right to use,
receive the benefits of, and dispose of a property in the most
absolute manner, subject only to a non-prohibited use.
• Any title, transfer or charge on the ownership right must be
registered on the local land registry (fichier immobilier).
Co-ownership
• Defined by Law.
• Ownership by various persons of a property or a group
of properties divided into co-ownership units (lots de
copropriété).
• Consists in:
–– privately owned areas (parties privatives);
–– rights over (ie. share in) the common areas (parties
communes).
• The division of the property is set-up and described in
regulations (état descriptif de division) which identify each
unit with a number, indicates its location and includes a
complete description of the private and common areas.
• Each co-owner has a right to use the common areas and
shares the related service charges.
• Decisions on the management of the co-owned building and
on works are taken according to majority rules defined by
law, which vary depending on the subject of the decision.
To simplify the procedure for undertaking works for building
preservation purposes and to protect the health and safety of
building occupants, law ALUR (loi pour l’accès au logement
et urbanisme rénové) dated 24 March 2014, has introduced
changes to certain rules on majority in the decision-making
process between co-owners.
Volume
• Created by notary’s practice.
• Division of the property into units of different shapes and
sizes, stacked horizontally or vertically, each with its own
straightforward right of ownership entitling its owner to build
within the limits of the unit and with no share in or right of
ownership on common parts.
• Often used for property complexes – such as La Défense – in
which the same property is to be held separately by various
owners (private as well as public entities) for different uses.
• Each owner automatically belongs to the owners’
management entity (association syndicale libre – ASL or
association foncière urbaine libre – AFUL) which main role is
to own and manage common facilities.
Leasehold
Construction lease (bail à construction)
• Tenant is committed to construct on the land (this is an
obligation, not an option); and keep the building in a proper
state of repair throughout the term of the lease.
• Tenant enjoys a right in rem which may be mortgaged, as may
the buildings constructed on the leased land.
• Minimum term of 18 years and maximum term is 99 years
(70 years for leases concluded before 3 January 1976).
• Tenant has to pay a rent.
• The lease must be drafted under a notarized form and
registered in the land registry.
Long-term lease (bail emphytéotique or emphytéose)
• Tenant is granted a right in rem, which can be mortgaged and
transferred.
• Term is between 18 and 99 years inclusive and may not be
extended by tacit renewal.
• Tenant has the right to construct a building, grant leases and
active or passive easements for the maximum term of the
lease.
• Tenant is responsible for operating the building and paying a
consideration.
• To ensure that it is enforceable against third parties, the lease
must be drafted under a notarized form and registered in the
land registry.
The BRILO (bail réel immobilier pour le logement), a lease
granting rights in rem over residential property
• This new type of lease, introduced by the law ALUR of
24 March 2014, enables private individuals or private legal
entities to grant rights in rem to tenants with an obligation to
construct a new building or renovate an existing building with
a view to the rental or temporary occupancy of a residential
property. The term of the BRILO is for 18 to 99 years.
• As with all leases granting rights in rem (bail emphytéotique,
bail à construction), the BRILO separates land from the
buildings upon it with the aim of reducing the price of
residential property on the market.
Rights affecting ownership
Easement (servitude)
• Is a burden imposed upon a property, for the use and utility of
another property belonging to another owner.
• Is exercised to the detriment of the property assets which
they encumber – servient land (fonds servant) – and to the
benefit of adjoining assets which they enhance – dominant
land (fonds dominant).
• As an attribute of the right of ownership, easements are
transferred with the related tenement.
• While the owner of a dominant land may, at its expense, carry
out any work required to use or to preserve the easement, it
is not entitled to do anything to aggravate the situation of the
servient land; the owner of the servient land must allow the
easement to be exercised without doing anything to restrict it.
Mortgage (hypothèque)
• Is a security encumbering the asset, which entitles the
beneficiary to a preferential right over other creditors in the
event of a forced sale of the relevant asset.
• Confers a droit de suite entitling a secured creditor to take
possession of the asset offered as security, even if it is in the
possession of a third party.
• Any property in France may be mortgaged and there is no
limit on the number of mortgages that may be created over
the same property.
Lender’s pledge (privilège de prêteur de deniers/PPD)
• Is a right derived from the lender’s claim for preference over
other creditors, even mortgagees.
• Applies only when the acquisition of the property is financed
by a loan, provided that the loan agreement is executed by
notarial deed and that the funds borrowed are used to pay the
price of the property.
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Investors Guide to Europe 2015