Co-ownership and Subdivision: When Selling a Right to Build is Legal

Imagine yourself in Grasse, in this residential neighbourhood where century-old olive trees stand alongside new villas. You have purchased a plot of land with a construction project, but you discover that the seller used a particular legal arrangement. Is this legal? Have you been deceived? This question, I hear regularly in my practice, whether in Grasse or in Mont-de-Marsan.

The decision we are analysing today precisely answers this question. It concerns a company that, after obtaining a building permit constituting subdivision (i.e., a permit authorising the division of a plot into several lots), resorted to the co-ownership regime to sell lots. But what exactly does this change for you, as an owner or purchaser?

The Court of Cassation, in its judgment of 19 January 2022, ruled: this practice is legal, provided it does not aim to circumvent legal obligations. Let's see together what this means concretely for your property projects.

The facts: a story that happens every day

Mr Dupont, an entrepreneur from Valbonne, had acquired a 5,000 m² plot on the outskirts of Grasse. His project? To build several villas to resell. He created a company, SARL Zohra, to carry this project. In August 2009, he obtained a building permit constituting subdivision, which allowed him to divide his plot into several buildable lots.

Rather than creating a classic subdivision, Mr Dupont opted for an original arrangement: he established a co-ownership over the entire plot. Each unit of this co-ownership comprised two elements: a right to build an individual house on part of the plot, and a share of the common parts (access roads, green spaces, utilities).

In 2015, he sold one of these units to Mr and Mrs Martin, a retired couple wishing to build their dream house near Grasse. The price? €180,000 for the unit, plus construction costs. The notary drafted the deed of sale, and the Martins began the works.

But problems quickly emerged. The Martins discovered that some promised collective facilities were not completed: the public lighting was incomplete, not all access roads were asphalted. They believed that Mr Dupont, through his company, had sought to circumvent the stricter obligations of subdivision by using the co-ownership regime.

In 2018, they brought legal proceedings against both the selling company and the notary. Their argument? The sale of a right to build within the framework of co-ownership would be a manoeuvre to avoid the obligations of making the land suitable for development (i.e., installing water, electricity networks, etc.) and collective facilities imposed in subdivisions.

The court of first instance partially ruled in their favour, ordering the company to carry out certain works. But the company appealed. The court of appeal, after thorough examination, overturned this judgment. It considered that no evidence proved that the operation had aimed to exempt the seller from its obligations. The Martins then appealed to the Court of Cassation, which rendered the decision we are analysing.

The court's reasoning — dissected

The Court of Cassation, in its judgment, examined two main questions. Firstly: is the sale of a co-ownership unit consisting of a right to build legal? Secondly: in this specific case, was there fault on the part of the seller or the notary?

On the first point, the judges relied on two provisions of the French planning code. Article R. 431-24 provides that a building permit can constitute subdivision, i.e., it authorises the division of a plot into lots. Article R. 442-1, for its part, allows recourse to the co-ownership regime for these lots. In short, the legislator has provided for this possibility.

The Court therefore considered that the Zohra company "merely exercises a right available to it" under these provisions. In other words, it is not because a practice is unusual that it is illegal. undefined, I have encountered cases where purchasers suspected fraud simply because the arrangement seemed complex to them. But complexity is not synonymous with illegality.

On the second point, the Court examined whether this operation had "the purpose or effect of exempting the seller from the obligations it had undertaken". The court of appeal had found that the company had indeed borne the costs of making the land suitable for development and collective facilities. The judges on the merits (i.e., the judges of the court of appeal) had noted that roadworks and utility works had been carried out, even if some details could be improved.

The Court of Cassation therefore validated the reasoning of the court of appeal: since no fault was established, the purchasers' claims for compensation had to be dismissed. It specifically examined two potential faults: that of the seller, which would have consisted of wanting to circumvent the legal regime of subdivision, and that of the notary, who would have failed in their duty of advice and information.

Regarding the notary, the Court recalled that their duty of advice implies informing the parties about the legal consequences of the deed. But it considered that, in this case, nothing proved a failure. The notary had correctly described the nature of the unit sold: a right to build with a share of common parts.

What few people know is that the Court of Cassation does not re-examine the facts. It only verifies whether the court of appeal correctly applied the law. Here, it considered that yes: the judges on the merits had sufficiently reasoned their decision by noting the absence of evidence proving an intention to circumvent.

What this changes for you — concretely

If you are a developer or seller of a plot to build on, this decision reassures you. You can legally use the co-ownership regime to sell rights to build, without systematically fearing legal action for circumventing subdivision. But be careful nonetheless: this freedom is not absolute.

You must absolutely respect your contractual obligations. If you have promised collective facilities in the specifications or the deed of sale, you must deliver them. In the Valbonne example, imagine you sell a unit with a promise of a communal swimming pool and a bicycle storage. Even if you use the co-ownership regime, you will have to build these facilities. Otherwise, you incur liability.

If you are a purchaser of such a unit, this decision means that you cannot challenge the sale simply because the seller used the co-ownership regime. You must prove a concrete fault: for example, that the seller deliberately avoided legal obligations to make savings. How to react? Before buying, check precisely what is included in the price. A right to build alone can cost €150,000 in the Grasse area, but if collective facilities are not included, you will have to pay extra.

For co-owners already installed, this decision clarifies the situation. Your co-ownership is not illegal simply because it includes rights to build. But you must be vigilant about the management of common parts. Who pays for the maintenance of access roads? How are charges allocated? These questions must be addressed in the co-ownership regulations.

If you are a notary or property professional, this decision reminds you of your duty of advice. You must clearly explain to purchasers what they are buying. A right to build is not a plot made suitable for development ready to build on. Construction timelines, necessary authorisations, additional costs: everything must be transparent.

Four tips to avoid this type of dispute

• Demand detailed specifications: Before buying a unit with a right to build, request a document listing precisely all promised collective facilities, with completion deadlines and penalties for non-compliance. In the Grasse area, I always recommend including even details like LED lighting for pathways or automatic irrigation for green spaces.
• Have the suitability for development checked by an expert: Do not rely on verbal promises. Engage a consultancy to verify that all utilities (water, electricity, sanitation) are correctly installed and up to standard. This check can cost €1,500 to €3,000, but it avoids surprises of €20,000 afterwards.
• Read the co-ownership regulations carefully: If the operation involves co-ownership, the regulations are crucial. Check how charges for common parts are allocated, who manages collective facilities, and what the construction rules are. Poorly drafted regulations can create conflicts for years.
• Consult a specialised lawyer before signing: One hour of consultation with a property law professional can save you months of litigation. Show them the draft deed of sale, the building permit, and the specifications. They can identify potential risks and negotiate additional guarantees.

In-depth analysis: related case law and developments

This decision fits into a rather consistent line of case law. Already in 2015, the Court of Cassation had rendered a similar judgment (No. 14-10.305) where it considered that recourse to co-ownership was not in itself a circumvention of subdivision. But it had added an important condition: this operation must not have the effect of depriving purchasers of the protections offered by subdivision regulations.

In 2018, another decision (No. 17-20.418) specified that the judge must investigate the intention of the parties. If the seller deliberately chose co-ownership to avoid more restrictive obligations, then there is fault. But it is for the purchaser to prove this intention.

The trend of the courts is therefore clear: they accept innovative legal arrangements, but they scrupulously verify that they do not harm purchasers. For the future, this means that developers will have more flexibility in designing their operations, but they must be impeccable in fulfilling their commitments.

What this means for you? Property projects can be more varied, with formulas adapted to each plot. But vigilance remains essential: a beautiful brochure does not replace solid guarantees.

What you must absolutely remember

Here is a numbered checklist of essential points:

1. The co-ownership regime for selling rights to build is legal: The Court of Cassation has confirmed it, provided there is no intention to circumvent.
2. Contractual obligations remain imperative: Whether you are a seller or purchaser, everything promised in the deed must be delivered.
3. The burden of proving fault lies with the purchaser: If you believe you have been harmed, you must prove that the seller deliberately avoided their obligations.
4. The notary has a reinforced duty of advice: They must clearly explain the nature of the unit sold and its practical consequences.
5. Collective facilities must be precisely described: A vague "green spaces" is not enough; plans, areas, tree species are needed.

Do you find yourself in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of litigation — and often much more. Book an appointment →