Real estate share deal: securing the sale of SCI interests

To acquire a real estate asset held by a company, there are two routes. The asset deal consists in buying the building directly: this is the classic property sale, by notarial deed. The share deal, by contrast, consists in buying the interests in the company that owns the building — most often an SCI. The building does not change owner; it is the company, and therefore indirectly the property, that changes hands.

Why a share deal changes things

A sale of SCI interests is not a property sale in the legal sense: it can be carried out by private agreement, without the mandatory involvement of a notary and therefore without the notarial escrow that usually accompanies a sale of a building. This flexibility has a downside: securing payment of the price is not automatic. The parties have to organise it themselves.

The risks to cover

By acquiring interests, the buyer takes over the company together with all of its liabilities: outstanding loans, tax debts, mortgages registered against the building, any litigation. The price must therefore remain frozen until these items have been checked and cleared. The seller, for their part, wants the certainty of being paid once the transaction is completed.

• Effective release of security and repayment of the loans secured against the building;
• Clearing of any pre-emption right and compliance with the shareholder approval clauses;
• Verification of the company's tax and accounting position;
• Satisfaction of the conditions precedent set by the sale protocol.

Escrow of the price, a safeguard for both parties

Entrusting the price to an escrow agent answers these concerns. The funds are kept in a dedicated account and released only once the agreed conditions are met: the buyer is protected against a hidden liability or unreleased security, and the seller is assured of being paid on the agreed terms. Neither party can deal with the funds unilaterally in the meantime.

When a lawyer takes on this role, the price passes through the CARPA account: every movement is checked and traced, the sums are isolated in a sub-account specific to the matter, and the whole transaction is covered by professional secrecy.

Real estate share deal or asset deal: a choice that drives the tax treatment

A sale of SCI interests (share deal) and a direct sale of the building (asset deal) are not subject to the same tax regime. The sale of the building falls under property transfer duties; the sale of interests in a company that is predominantly property-based is subject to a specific registration duty. The treatment of capital gains also differs. This tax trade-off, to be worked through in advance, affects the structuring of the transaction — but in both cases, securing the price through escrow remains relevant.

The conditions for releasing the funds in an SCI share deal

The escrow agreement defines the precise conditions for releasing the price. In a sale of SCI interests, they typically relate to:

• The signing of the deed of sale of the interests and its registration;
• Compliance with the approval clause and clearing of any pre-emption right;
• The release of security and repayment of the loans secured against the building;
• The delivery of the corporate documents and updating of the company's registers.

Preparing a sale of SCI interests? Fidens puts the escrow of the price in place and secures your real estate share deal through to the release of the funds.