Investor Guide to Europe 2014
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TYPES of oWnERSHIP
Î
freehold
ownership
•
French Civil Code defines ownership as the right to use, receive the
benefits of, and dispose of a property in themost absolutemanner,
subject only to a non-prohibited use.
•
Any title, transfer or charge on the ownership right must be registe-
red on the local land registry
(fichier immobilier)
Co-ownership
•
Defined by Law
•
Ownership by various persons of a property or a group of proper-
ties divided into co-ownership units
(lots de copropriété)
.
•
Consists in:
- privately owned areas
(parties privatives)
;
- rights over (ie. share in) the common areas
(parties com-
munes)
.
•
The division of the property is set-up and described in regulations
(état descriptif de division)
which identify each unit with a num-
ber, 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.
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 (pri-
vate 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)
whichmain role is to own andmanage
common facilities.
Î
Leasehold
Construction lease
(bail à construction)
•
T
enant 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 termof the lease.
•
Tenant enjoys a right in remwhichmay bemortgaged, as may the
buildings constructed on the leased land
•
Minimum termof 18 years andmaximum term is 99 years (70
years for leases concluded before 3 January 1976).
•
Tenant has to pay a rent.
•
The leasemust be drafted under a notarized formand registered in
the land registry.
Long-term lease
(bail emphytéotique or emphytéose)
•
Tenant is granted a right in rem, which can bemortgaged and
transferred.
•
Term is between 18 and 99 years inclusive andmay not be
extended by tacit renewal.
•
Tenant has the right to construct a building, grant leases and active
or passive easements for themaximum termof the lease.
•
Tenant is responsible for operating the building and paying a consi-
deration.
•
To ensure that it is enforceable against third parties, the lease
must be drafted under a notarized formand registered in the land
registry.
RIGHTS affECTInG oWnERSHIP
Î
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 landmay, 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 landmust allow the easement to be
exercised without doing anything to restrict it.
Î
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 posses-
sion of the asset offered as security, even if it is in the possession of
a third party.
•
Any property in Francemay bemortgaged and there is no limit
on the number of mortgages that may be created over the same
property.
Î
Lender’s pledge
(privilège de prêteur de deniers / PPD)
•
Is a right derived from the lender’s claim for preference over other
creditors, evenmortgagees.
•
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.
Î
Pre-emption right
•
Is the statutory option provided to certain public authorities to subs-
titute an acquirer in a real estate transfer for purposes of general
public interest.
•
Is held by the public entities and prevails over any rights of pre-em-
ption whichmay be held by private persons.
PRoPERTY LaW
