Structure adapted to property development
Lawyers in Bastia, Lawyers in Corsica, Lawyers in real estate law
What legal form can a property developer take?
How do you manage a property development?
Everything you need to know about property development regulations.
I.- Definition of a property developer?
Property developers can operate either as individuals or as legal entities.
How does the real estate development ?
Its mission is to take charge of the construction of properties for sale in a future state of completion (VEFA). It manages operations, from the design stage through to the marketing of the project, including the search for financing.
No qualifications are required to work as a property developer. This means that anyone can become a property developer. On the other hand, it is a complex business that requires many specific skills and resources. You also need to be familiar with the local property market and understand the legal bases of the business.
II - Regulations governing property developers (Structure adapted to property development) :
The property developer business is governed by a number of laws:
-. 4 January 1978: liability and insurance in the construction sector
-16 July 1971: transactions carried out by construction companies
-. 2 January 1967: regulations governing sales of buildings for construction
However, the Civil Code does not specify any specific obligations relating to the status of property developer, apart from the obligation to achieve results (meeting deadlines, project conformity, knowledge of the legislation and the risks involved, etc.). Only the activity itself is governed by a definition of the clauses of a contract.
If you are interested in property development, you have two options.
Did you initiate the project yourself?
In this way, you become the project owner and commit your own finances via a mortgage. If you are a service provider, you work on behalf of a company that commits its own funds to the project.
III - The preferred legal form for a property developer (Structure adapted to property development) :
A.- The advantages of the SCCV
Have you decided to go into property development? Now is the time to choose a legal structure. The legal form best suited to the property development business is the société civile de construction-vente (SCCV).
This legal structure is a special type of Non-trading property company (SCI), which benefits from a special tax regime. The first advantage of setting up a SCCV is that it is tax transparent. The Société civile immobilière is not liable for corporation tax, as it is governed by the partnership system. SCCVs can be marketed as VEFA (Vente en l'état futur achèvement), which is the sale of a flat off-plan, i.e. before it is built.
B.- Conditions for creating an SCCV
Setting up an SCCV requires a minimum of 2 partners, who may be natural or legal persons of any nationality. There is no minimum capital required to set up an SCCV.
The only condition is that the Société Civile Immobilière (SCI) must be registered in the Trade and Companies Register.
What you also need to know about property development (Structure adapted to property development) :
Lawyers in Bastia, Lawyers in Corsica, Lawyers in real estate law
The property development sector includes all companies whose main activity is to carry out real estate transactions in :
-housing,
-tourist residences and leisure buildings,
-residences with services and/or operations,
-offices, commercial and industrial premises in commercial property,
-development and subdivision operations.
Dwellings account for around 80% of the output of FPI developers, and apartment blocks for 85%.
Property developments are new build or renovation programmes.
I.- The reference NAF codes are :
41.10A - Housing development, including hotel and leisure accommodation
41.10B - Office property development
41.10C - Development of other buildings (shopping centres, warehouses, factories, hospitals, etc.)
41.10D - Legal support for programmes
II. The developer is a project owner
It initiates the construction of the building it intends to sell, raises the necessary finance for the project and assumes the risk. As the initiator, manager and pilot of the project, he is the person on whose behalf the building is constructed.
III. The professional promoter is a legal entity
The development operation may be carried out by the development company itself or by an ad hoc legal structure, generally a société civile immobilière (SCI), which is the owner of each property development. National developers have more complex structures, with subsidiaries depending on the region or the group's real estate activities: development of housing, offices, land development, transactions, rental management, etc.
IV. The different stages of a property development project
The main stages in a property transaction are :
-. Research and evaluation in the field
-. Setting up the operation
-. Buying work
-. Monitoring the project (works, financing, marketing, handover)
-. Marketing the project
-. The delivery
-. Post-delivery and monitoring of buyers' warranties
V.- The promoter's partners
Property developers are orchestral conductors who work in collaboration with a wide range of players: land operators, developers, local authorities, major concessionaires, other developers (co-development) and public housing offices, architects (design/execution), design offices, lawyers, tax experts, economists, marketers, insurers, financiers (banks), investors, property companies and asset managers.
VI. A highly supervised activity
The property development business is highly regulated and the responsibilities of developers are formalised.
The sale of new homes is governed by the VEFA (vente en l'état futur d'achèvement, or sale off-plan) system, which sets out the developer's responsibilities to the purchaser.
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