Author Archives: Edouard Figerou


EU Treaties form the constitutional basis of the EU and create the Single Market supported by the four freedoms of movement in goods, people, services and capital. The EU Treaties were implemented into UK law through the European Communities Act 1972 (« ECA »)

From a legal standpoint, by becoming a third state of the European Union, EU legislation is no longer applicable to the United Kingdom from January 1, 2021.

A. The impact of Brexit on family law

The impact of Brexit is limited in family law given that the UK did not ratify most of the EU regulation, such as :

  • Regulation (EU) n ° 1259/2010, known as « Rome III », on the law applicable to divorce and legal separation, of Regulation (EU) n ° 650/2012 ,
  • Council Regulation (EU) 2016/1103 of 24 June 2016 in matters of matrimonial property regimes,
  • Regulation (EU) 2016/1104 of the Council of 24 June 2016 in matters for registered partnerships.

Therefore, in matters of law applicable to divorce, inheritance, maintenance obligations, matrimonial regimes or registered partnerships, Brexit will not change the current legal situation. Common private international law continue to apply.

Brexit will however have a noticeable impact in other areas of family law, for example :

  • in matters of jurisdiction and the recognition and enforcement of divorce decisions
  • or relating to parental authority.

Regulation (EC) No 2201/2003 (Brussels II bis Regulation) will continue to apply to the recognition and enforcement of authentic instruments drawn up or registered before January 1, 2021 (no exequatur, neither legalization nor apostle).

After this date, French authentic instruments will no longer be able to benefit from automatic recognition or enforcement in the United Kingdom (and vice versa). It will take resort to private international law as well as to the exequatur procedure.

However, the United Kingdom remains subject to the Hague Convention of 19 October 1996. Likewise, he will remain subject to the Hague Convention of 2 October 1973 on the recognition and enforcement of decisions in matters of maintenance obligations.

B. The impact of Brexit on other areas of civil law

The UK’s exit from the European Union will have consequences in the following areas:

  • Regulation (EU) n ° 1215/2012 (Brussels I bis regulation) will continue to apply to the recognition and enforcement of authentic instruments drawn up or registered before January 1, 2021 (no exequatur or legalization, nor apostille). Subsequently, French authentic acts drawn up or registered from January 1, 2021 will no longer be immediately applicable and an exequatur must be obtained as well as an apostille. From January 1, 2021, the 1961 Hague Convention removing the requirement to legalize foreign public documents (known as the « Apostille Convention ») will apply between the Member States of the Union and the United Kingdom.
  • Regulation (EC) No 805/2004 (European Enforcement Order for Uncontested Claims) will continue to apply to authentic instruments drawn up before January 1, 2021, provided that certification as a European Enforcement Order has been requested before the end of the transitional period (no exequatur, no legalization, no apostille). Subsequently, an exequatur must be obtained just like an apostille. From January 1, 2021, the Apostille Convention will apply between the Member States of the Union and the United Kingdom.
  • The Withdrawal Agreement does not address Regulation (EU) 2016/1191 (Public Documents Regulation) which removes the legalization and apostille requirement between Member States for certain public documents (for example, a birth certificate ) and simplifies other formalities. The application of this regulation does not depend on the date of issue of the public document by the authority of one Member State, but on the date on which it is presented to the authorities of another Member State. Consequently, the Regulation will no longer apply to a public document issued by the UK authorities and presented to the authorities of a Member State of the Union after the end of the transition period, regardless of its date of issue and its period of validity. An illustration: the requirement of a « probate » in the context of an English or Scottish succession will now require the apostille (Apostille convention).

Source of the Conseil supérieur du Notariat.

Actualités Janvier 2017

L’article 2113-5 du Code général des collectivités territoriales prévoit que la fusion de communes est prononcée par un arrêté préfectoral de fusion publié. Cet arrêté créant la commune nouvelle n’emporte pas transfert de droit automatique de propriété, parcelle par parcelle, sans publicité au service de publicité foncière compétent.

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The amendment repealing the flat-rate income tax on some non-residents

The amendment repealing the flat-rate income tax on some non-residents

(Articles 164 C & 197 A of the French Tax Code)

 The Amending Finance Law 2015 repeals provisions regarding the flat-rate taxation of some residents of third countries who own one or more residential properties.

This is to reflect decisions from both the Court of Justice of the European Union and the French Conseil d’Etat and shall take effect for the taxation of income of the year 2015.


 A reminder

Taxpayers domiciled outside France are, in principle, taxed solely on their French source income.

However Article 164 C of the French General Tax Code provided that people who did not have their tax domicile in France but who had in France one or more residential properties, in any capacity whatsoever, directly or under cover of third parties, were subject to income tax on a base equal to three times the actual rental value of this or these properties unless the French source income of the concerned parties was higher than said base, in which case the amount of such income would be the basis for taxation.

This measure included several exceptions that significantly reduced its scope.

In deed said provisions did not apply to:

  • French nationals who could prove they underwent in the country where they had their tax residency a personal tax on all of their income and if said tax was at least equal to two thirds of the one they would have had to undergone in France on the same tax base;
  • French nationals whose expatriation was justified by professional requirements and whose tax domicile was located in France continuously for four years prior to their transfer.
  • Taxpayers domiciled in countries or territories having concluded with France a tax convention to avoid double taxation with respect to taxes on income.


Recent court rulings

Drawing on the consequences of decisions from both the Court of Justice of the European Union (CJEU) and the French Conseil d’Etat, Article 21 of the Amending Finance Law 2015 repeals the provisions of articles 164 C and 197 A b of the French General Tax Code.

  • Preliminary ruling Welte of the CJEU dated October 17th, 2013 2013 (Case C-181/12 Welte of October 17, 2013)

It stems from said ruling that patrimonial property investments, made for private purposes i.e unrelated to economic activity, do not constitute direct investment within the meaning of Article 57 of the Treaty establishing the European Community (TEC).

The opinion of the Advocate General MENGOZZI delivered on June 12th, 2013 regarding said case shed light on the interpretation of Article 57(1) EC, and its applicability.

“41.       As I have already pointed out, Article 57(1) EC enables Member States to maintain, vis-à-vis third countries, restrictions existing on 31 December 1993 on the movement of capital involving ‘direct investment – including in real estate’.”

The question whether the French rules above mentioned fell within the temporal and material scope of the standstill clause was less straightforward.

The ratione temporis condition laid down in Article 57(1) EC was met by Article 164 C of the French General Tax Code, and therefore we will not go into further detail in the present article.

However as regards the material scope of Article 57(1) EC, it should be noted that there were legitimate doubts as to whether capital movements in the form of investments in real estate unrelated to economic activity, regulated by the tax legislation of a Member State entailed ‘direct investment – including in real estate’ for the purposes of Article 57(1) EC.

“50.     As I have mentioned, in the absence of a definition of ‘capital movement’, the Court has, so far, consistently relied on the definitions contained in the nomenclature in Annex I to Directive 88/361 and the associated explanatory notes in order to interpret both Article 56 EC and Article 57 EC. (30) …”


“54.     According to the nomenclature, investments in real estate covered by category II, which are defined in the explanatory notes as ‘[p]urchases of buildings and land and the construction of buildings by private persons for gain or personal use’, are investments ‘not included in category I’, that is to say, not direct investments.”

“55.     Thus, the reference in Article 57(1) EC to ‘direct investment – including in real estate’ (33) should be construed as covering investments in real estate which constitute direct investments, that is to say – to paraphrase the explanatory notes – investments in real estate of such a kind as to establish or to maintain direct links with an entrepreneur or an undertaking in order to engage in an economic activity.”

“56.     By contrast, investments in real estate of a financial nature, which are unconnected with the pursuit of an economic activity, do not fall within the scope of Article 57(1) EC.”

  • Two judgments of the State Council of 26 December 2013 (No. 360488 and 332885)

Based on the conclusions of the ruling Welte, the French Conseil d’Etat in two successive decisions concluded that the flat-taxation of non-residents under article 164 C of the General Tax Code was contrary to the principle of free movement of capital in Article 56 TEC.

Article 164 C aimed to « submit detention in France of residential property to a tax payable by persons not having their tax domicile in France,». The court considered « that such a measure is likely to discourage non-residents to acquire or hold such property ».


The Amending Finance Law 2015

Article 21 of the Amending Finance Law 2015 (Law n°2015-1786 dated December 29th, 2015) abolishes the flat-rate taxation of certain non-residents owning one or more residential properties in France by repealing the provisions of Article 164 C of the French General Tax Code, a long side the provisions of Article 197 A b of said code.

Previously during the session en hémicycle on December 1st, 2015 Valerie Rabault, ‘rapporteure générale de la commission des finances, de l’économie générale et du contrôle budgétaire’ declared that: « Our Committee had already issued a favorable opinion on this amendment, but in addition, the services of the Ministry of Finance – whom I thank – indicate that this provision would concern 114 persons for a tax revenue of 86 000 euros. I think that the State can afford to do without said sum!

Said measure applies from the taxation of income of 2015.


Droit public : lettre aux collectivités – Octobre 2015

La réforme du droit de préemption par la loi ALUR


Avec la loi ALUR, la préemption a fait l’objet d’une réforme d’ampleur. Alors que le gouvernement n’avait, à l’origine, pas l’intention de toucher au droit de préemption, le texte finalement voté modifie substantiellement le champ d’application de ce droit comme les modalités de sa mise en oeuvre.


Champ d’application
S’agissant du champ d’application, les principales évolutions tiennent à la possibilité désormais offerte aux collectivités publiques de préempter lors de donations entre vifs (C . urb., art. L. 213-1-1).
Pour que la préemption soit possible, il faut toutefois que le transfert de propriété ne soit pas
opéré au profit d’ascendants et descendants, collatéraux jusqu’au sixième degré, époux ou partenaires d’un Pacs ou encore entre une personne et les descendants de son conjoint ou de son partenaire de Pacs, ou entre ces descendants.


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Adopting your stepchild

French legislation knows two different kinds of adoptions:

  • One where the blood parent is deprived of any right on his child, where all links between the child and his biological family end;
  • One where, in the contrary, the child meets two families: his biological one and his adoptive one.
    Both have rights on the child, custody and authority to help him/her grow up and become adult.

The latter adoption is often used for step children, or where one child was raised in the absence of his biological parent (car or plane accident, disease…) by uncles and aunt for instance.
When stepparents are taking full day-to-day responsibility for stepchildren they may want to make their relationship with these children more formal and this is where the adoption comes.


English Law knows only one kind of adoption. We call it under French Law : ‘full adoption’ !

Several conditions must be fulfilled in the UK – Adoption and Children Act 2002:

The Child must :

  1. be under the age of 18 when the adoption application is made
  2. not be (or have never been) married or in a civil partnership

Both birth parents normally have to consent to the adoption, unless:

  1. they can’t be found
  2. they’re incapable of giving consent, eg due to a mental disability
  3. the child would be put at risk if he/she wasn’t adopted

The adoption assessment in England is very similar to that in France:

An assessment is used to help a court decide if you can adopt the child (rather than being sent to an independent adoption panel).

The court will ask your local council to provide a report on your partner, the child and the other birth parent.

If granted, the adoption court order gives you parental responsibility for the child – along with your spouse or partner.


International conflict of law:

Pursuant to UK law, one must follow the adoption laws of the country of residency of the adopter.

You must follow UK adoption law if you’re normally resident in the UK.

You may have to give a sworn statement in front of a solicitor that you’re no longer habitually resident in the UK, the Isle of Man or the Channel Islands if the country asks for a ‘no objection’ letter from the UK government.

You must send this statement either to the Intercountry Adoption Team at the Department of Education or the nearest British embassy.

Also, the guidance for adoption provided by the British government is clearly recognized by the convention on adoption made under the Hague convention of 29 May 1993. The UK implemented that convention on 1 June 2003.


How can somebody adopt a stepchild? Is a British citizen entitled to adoption in France? What are the limits?

Article 370-3 of the French Civil code foresees whichever the law is applicable that adoption requires the consent of the legal representative of the child. Consent must be free, without consideration and with full understanding of its consequences.

This rule is inspired from the historic case of PISTRE in January 1990 and from article 4 of the International Hague Convention on adoption.

French Law also provides that the conditions of adoption are normally subject to the National Law of the adopter or, in case of adoption by spouses, with regard of the law governing the effects of their union.

The adoption cannot be pronounced if the national law of one of the spouses bans it.

Legally speaking the “adoption simple” is not forbidden in the UK but unknown! Does that mean a British resident in France can adopt “simply” his/ her stepchild? Would that be recognized and would that have any effect in France?

If the adopted child is under 18, the French jurisdiction would certainly accept to pronounce the adoption whereas if the child is over 18, the French jurisdiction would certainly refuse it because of the rules applicable in the UK.

When the adoption is ordered it will have full effect in France and of course and in the UK because of the implementation of the Hague convention in UK Law as evoked here above.

Be careful with Adult adoption which is permitted in France contrary to England. Although you have legally adopted a child abroad according to the rules of the state of your residency, England might not consider that adoption as valid.


What are the regular effects of an adoption order?

a) Legally speaking

The Court order of adoption takes away parental responsibility from:

  • the child’s other birth parent
  • anyone else who has parental responsibility for the child

b) From a tax point of view:

Transmissions that occur between adoptive parents and the adopted person are subject to normal taxation in the direct line for succession rules, (progressive rate after application of a personal allowance of € 100.000,00).


What are the effects of a ‘simple adoption’ order?

a) Legally speaking

The Court order of adoption does not take away parental responsibility from the child’s other birth parent but can multiply the number of guardians in the best interest of the child.

Simple adoption creates a maintenance obligation between adopter and adoptee and vice versa.

The biological parents of the adopted child are not bound by this obligation unless the adoptee proves that he cannot obtain relief of his adoptive parents.

The obligation of the adopted child to his biological parents ceases if he was admitted as a ward of the state and supported by welfare.


b) from a tax point of view:

Transfer of assets that occur between adoptive parents and adopted follow are levied at the prescribed tariff for the link natural kinship between them or, where applicable, the tariff for transmissions between non-relatives.

Article 786 of the French CGI provides for a number of exceptions to this principle, so that transmissions thus referred to are taxed according to the tax regime applicable to lineal transmissions.

It is especially the case when somebody adopt his/her stepchild where stamp duties are the same as the ones applicable in the direct line.


Examples :

Mr Smith, British Citizen, is residing in Dordogne (France) where he married Hilary in 2007 who is the widow of a UK soldier. Hilary had one child from her previous marriage named Winston.

Mr. Smith is willing to adopt his stepchild who agrees with that. Is that adoption possible?

According with article 370-3 of the French civil code, the adoption is subject to the British rules (National law of the adopter).

We know that UK law prohibits adoption between adults and only knows ‘full adoption’.

That should imply whether Mr Smith is still willing to continue the adoption process that he will have to adopt his stepchild before he turns18 and in ‘full adoption’ (with the consequence of wiping out his stepchild natural/ biological kinship).

When a stepparent adopts their partner’s child it ends the legal relationship between that child and their other natural parent and that wider family network (grandparents and other relatives).

Sometimes that makes the child feel that they have to choose between different adults and later may blame you or your partner.

The child is losing all maintenance and inheritance rights too.

It is likely the French court would accept a ‘simple adoption’ (see case 1 infra) yet the British court does not know that type of adoption for the reason seen aboved.

Le nouveau cadre d’exercice en SEL et SPFPL des pharmacies d’officines

Suite à la validation, en séance publique du 27 février 2015, du décret du 7 juin 2013 qui avait défini le nouveau cadre d’exercice en SEL et SPFPL des pharmacies d’officines, veuillez trouver ci-joint la décision du Conseil d’État.

Consultez la décision du Conseil d’État du 27 février 2015 n°369949 (decision-du-conseil-d-etat-du-27-fevrier-2015-n-369949)

Buying and selling a vineyard in France

The particularities of purchases in the wine sector are not well known, especially to foreign investors.

Let’s take a quick insight into this sector that is so sought-after, especially after some substantial changes were made by the last agricultural law.

The last three years have been rich with viticultural purchases… Château Beychevelle, Château Lascombes, Château Haut Redon and many others.

Even though dealings are numerous, caution must be applied.
The French legal system is highly protective with its agriculture and seeks to preserve the quality of the soil by maintaining a minimum size to each farm and by giving priority to qualified farmers.

Some transactions can be complex, and this may be down to several reasons, for example:
– The legal and commercial organization of the domain (one or more companies holding ownership of the property, when another may manage & run the farm);
– The purchase scheme envisaged: whether it be a purchase of shares (« share deal ») or a purchase of certain viticultural assets (« asset deal »);
– The person/profile of the purchaser (farmer or investor, French or foreign).

These transfers are not only subject to a control of the French land agencies, named SAFER’s (« Sociétés d’aménagement foncier et d’établissement rural » = Land Improvement and Rural Settlements Companies), i.e agricultural bodies that have a right of first refusal of most rural properties that come onto the market; but are also subject to national regulations that monitor farming structures (« le contrôle des structures des exploitations agricoles »).

All of these factors reflect the specific nature of transactions in this field.

The latest agricultural law of October 14th, 2014 made quite a few changes that will affect vineyard sales.

Throughout this article we will attempt to raise both future purchaser’s and vendor’s awareness on how to structure their transactions.
First of all we will take a look at asset deals, before talking about share deals, and finally we will take a look at the specific reconveyancing system (« retrocession ») involving the SAFER.

Asset deals in the wine sector

As part of an asset deal the investor or farmer acquires immovable and movable assets assigned to the wine-farm (cultivated plots, replanting rights, bare land, built property, intellectual property rights, necessary equipment to run the farm, etc.)
The running of the vineyard will be continued under a different legal entity. The buyer will need to create a new legal entity or use an existing one for completing the transaction and all further operations.

The major advantage of this scheme for the buyer is that he/she is exposed to smaller risks as possibilities of adverse effects arising are minimized since within the asset deal, apart from the assets, only certain liabilities are taken over.
The purchaser is protected against any liability that would be transferred together with the assets, contracts and employees of the farm.
Memo: Currently the courts consider on the basis of Article L.1224-1 of the Labour Code that the employees assigned to the farm are transferred to the new owner when he/she purchases an « autonomous economic entity whose identity and activity is maintained or resumed ».

In the case of an agricultural fund (« fonds agricole »), which has a civil character by nature, the legal and tax-related rules applied to business (i.e commercial) sales (eg registration rights and the right of opposition of creditors of the seller) are not applied by principal. However they may be used if the purchased farm also has a commercial activity, such as a trade of wine products not issued from the wine-farm.


  •  The requirement to obtain a farming licence

Article L.331-2 of the Rural Code, amended by the last agricultural law of October 13, 2014 specifies in which cases vineyard purchases are subject to obtaining a farming permit. In France this is called an « autorisation d’exploiter au titre du contrôle des structures agricoles ».

Up until now, the control of agricultural set-ups was set by national guidelines, who were applied at a departmental level to reflect local criteria.
However the new law has shifted the departmental framework. Thus, during the course of 2015 regional masterplans (« schema directeur régional ») will replace existing departmental masterplans. A decree of the French Conseil d’État should come specify the conditions and new development modalities of said regional masterplans, however the decree has not been issued yet.

The regional masterplans should set some basic standards, and in particular define the surface threshold beyond which a farming license is required.
Memo: The reference unit (« l’unite de reference », l’UR) previously defined at a departmental level has been abolished by the new law.

The transactions that trigger the control of agricultural structures remain largely unchanged: new set-ups, expansions or farm holdings. However the threshold should be lowered to be situated between 1/3 and 1 regional average agricultural area. Mechanically this will have for effect the increase in numbers of transactions subject to authorization.

To summarize new set-ups, expansions or farm holdings are subject to prior approval provided that:
– the total area to be farmed exceeds a threshold determined by the regional masterplan – we are still awaiting said plan, however and to give you an idea, before the departmental plan from December 29, 2000 stipulated that the total area would need to exceed 1.5 times the reference unit (UR). This was the equivalent of 33 hectares of vines used in AOC Bordeaux red;
– the purchasing structure contains no member qualified as a farmer, and this whatever the total area purchased to be farmed.
Therefore, the purchase of a vineyard by an investor will normally be subject to obtaining a license to operate.

Memo: Until the publication of the new regional masterplans, which should take place this year, the regulations on control of agricultural set-ups will continue to apply as before.


  • The pre-emption rights of the SAFER

The main agricultural bodies that supervise farmland transfers are the SAFER.

Each SAFER has a right of first refusal allowed by the Prefect (« Monsieur le Préfet »). Dependent on the geographical area they are granted a minimum surface area of real estate sold over which their right may be used.
The minimum area granted to the SAFER Aquitaine, for example (which covers the departments of the Gironde, the Landes and the Pyrénées-Atlantiques) is 10 ares (0,25 acres) in the wine-growing areas where wine have an « appelation d’origine protégée » (APO).

Similarly are also subject to the pre-emption rights of the SAFER transfers of immovable property used for agricultural purposes, and their movable assets, as provided by Articles L.143-1, R.143-1 and following of the Rural code.


Share deals in the wine sector

As part of a share deal, the buyer (investor or farmer) purchases the shares and equity stakes of the company that owns the assets necessary to run and operate the vineyard, winery and trade of all its products.

In such a case the farms operations continue to be performed notwithstanding the change in ownership.
Benefits, costs, rights and obligations associated with the existing assets and liabilities (debts) remain within the company and all potential risks associated with the above are usually taken over by the purchaser.

Memo: As part of the agreement between the selling company and the purchaser of certain assets, subsidiaries or investments, the company is subject to standard warranty clauses relating to assets and liabilities. The asset and liability granted ensures the purchaser that all the necessary resources are indeed owned by the company and that there are no hidden liabilities. In practice the vendor makes several statements in the contract about the company in which he basically declares the assets of the company sold (the existence of said assets and regularity of the accounting methods). In addition, he ensures the shareholder’s equity on a given date (of the latest balance sheet) and agrees to pay the purchaser all decreases whose generating phenomenon took place before the date of the last balance sheet. This guarantee is given over a period of time and will have a fixed ceiling.

Three main corporate structures exist where farming is concerned:
– Landholding companies – called « Groupements Fonciers Agricoles » (GFA)
They are agricultural land groupings whose purpose are to create or to preserve one or more farms. They have the specificity to enable people to preserve land holdings outside the strict definition of the farm.
At least two partners are required in a GFA.

– Farm management companies – called « Sociétés Civiles d’Exploitation agricole ou viticole » (SCEA /SCEV)
Their aim is to manage or run a farm. They provide the advantage of allowing non-farming partners, investment companies for example.

– Commercial companies – of which we have les « Groupements d’intérêt économique et environnemental » (GIEE)


This is a new tool created by the last agricultural law of October 2014.
The aim is to promote the emergence of collective dynamics taking into account both economic and environmental objectives. And to encourage their creation they will benefit from a deliberately flexible framework, no imposed form or legal status.


  • No requirement to obtain a farming licence

The control of agricultural set-ups is not specific to the asset deals.
Are also subject transactions affecting the share capital of the management companies in order to avoid the setting-up of companies whose sole purpose would be to avoid said regulations.

For example the Ministry of Agriculture considers that if a farmer takes an interest in any operating company he must be subject to prior authorization provided that the total surface area exceeds the threshold defined in the master plan. Indeed, such an action is seen as an extension of the initial set-up, subject to authorization.

However things are not all clear when it comes to share deals, and uncertainties arise especially when it comes to financial participations.
The concern comes from the large definition of the concept of farming business (« exploitation agricole ») within the meaning of Article L.331-1 of the Rural Code.

A circular from the Ministry of Agriculture of May 21st, 2008 states that « the mere financial contribution in an agricultural company is not subject to authorization under the control of agricultural set-ups. »
We can deduce from this the essence of the previous agricultural laws, i.e the fact that farmer is more important than the investment of non-farming partners.
However when we know the possible influence any investor can have on decision making it was envisaged to qualify investors as ‘farmers’ in regards to the control of agricultural set-ups.
The law of October 13, 2014 attempted to redefine the notion of farm businesses subject to the control by targeting « any direct or indirect contribution in another farm. » However the French Conseil Constitutionnel rejected the attempt, and judged that said provision infringed entrepreneurial freedom and property rights. Certain legal authors wrote that in order to comply with the constitution, the law should have specified « significant contributions » instead.


  • Henceforth a pre-emption right of the SAFER in share deals

Before the law of October 13, 2014 the pre-emption right of the SAFER could only be used when real estate used for agricultural purpose or farming land was sold.
Thus, as part of a share deal, the SAFER had no pre-emptive rights, even in the case of a massive transfer of shares. These transfers only needed to be declared to the authorities.

Now the SAFER may acquire by means of a private sale contracted directly with the vendor shares of farm management company (for example: SCEA) or a landholding company (for example: GFA). Thus, a SAFER can acquire:
* all the shares in a farming company,
* all or part of the shares of a GFA or GFR.

In addition, the SAFER now benefits from a right of first refusal in the event of the sale of shares. However please note that such pre-emptive rights may only be exercised in the event of sales of the entire shares of a farming company (for example: SCEA) or a landholding company (for example: GFA), and it may lead to the installation of a farmer.


So-called « retrocession operations » involving the SAFER

As we have mentioned above the principal aim of the SAFER is to purchase (part 1) rural property to sell it on again (part 2). They can also acquire, in the aim to improve property structures, shares in agricultural companies allowing to possess or to enjoy the farming business or land (Article L.141-1, II, 3°).
However the grounds on which a SAFER can intervene must be based on the interests of maintenance and development of the farming fraternity or the local environment. They would not be allowed to buy land to put up a commercial center for example.


  • How does it work?

Instead of going through with part 1 (purchasing the property) to its completion the SAFER also has the right to substitute one or more beneficiaries, who will purchase all or part of the farm in their place.
To do so, the SAFER will sign crossed unilateral promises with both the seller and the purchaser. The latter will have no contractual relationship until the day of the final signature.
However and due to the status of the SAFER, there must also be a public call for candidacies. At the end of a period of 15 days the SAFER will designate the person to whom the farm will be awarded. If no candidacies were made the SAFER will designate the potential purchaser with whom was signed the unilateral promise to purchase. Said person will substitute his/herself in the final deed.
It’s what we could call reconveyancing.


  • What are the advantages and disadvantages of such an operation?

Two main advantages exist in this type of scheme:
Firstly, the company awarded the farm is by principal exempt from any application for farming permission, which can significantly speed up the completion of the transaction.
Secondly, the right of pre-emption of SAFER, of which is always source of shared uncertainty for the seller and the buyer, is automatically dismissed.

The main disadvantage to a simple and direct sale between the vendor and the purchaser is the intervention of a third party, i.e. the SAFER that has the power to buy and sell the estate.

Moreover, it cannot be excluded that after the candidacy procedure the SAFER chooses a third party (deemed a better candidate) who the farm would then be offered to.
Another disadvantage of this procedure is that the purchaser will subsequently be subject to the SAFER’s rules and regulations, such as the obligation to maintain the agricultural purpose of the property over a certain length of time, or to grant the SAFER a preferential right to purchase the property if it is sold within the next ten years.
We hope that this brief article relating to the specificities of vineyard transactions has been insightful.