Manager of a SCI: Beware of Works Not Authorised by the General Meeting

You are the manager of a SCI (French civil property company) and urgent works are required? In Mérignac, as elsewhere, the temptation is great to act without convening the general meeting. However, a decision of the Court of Cassation from 1972, still relevant today, warns: ordering works not approved by the general meeting exposes the manager to having to reimburse them out of his own pocket. How to avoid this pitfall? Analysis.

The facts: a story like many others

Imagine a SCI owning a building in Le Bouscat. In 1959, the general meeting approved a works contract for an amount of 1,793,940.85 francs (approximately €273,000). The manager, Mr X, placed the order. But as the project progressed, he ordered additional services not provided for in the initial contract, without ever seeking a new agreement from the partners. The SCI, dissatisfied, refused to pay and sued the manager. The Court of Appeal condemned Mr X to reimburse the amount of the additional works, on the grounds that, according to it, 'in case' he had ordered works other than those authorised, he would be required to reimburse them. The manager appealed to the Court of Cassation, arguing that the Court of Appeal had ruled on hypothetical grounds (i.e., based on a supposition, not on certainty).

Who was right? The Court of Cassation, on 7 January 1972, ruled in favour of the SCI. It held that the Court of Appeal had not ruled on hypothetical grounds, but had indeed found that the manager had exceeded his powers. In essence, once the general meeting has set a precise framework (a contract of 1.7 million francs), the manager cannot bind the company beyond that without new authorisation.

The reasoning of the court — analysed

The central legal question is: can a manager of a SCI bind the company for works not voted on by the general meeting? The trial judges (the Court of Appeal) had answered in the negative, but using an awkward phrase ('in case'). The manager seized the opportunity: he argued that the court had reasoned on a hypothesis, not on proof. The Court of Cassation dismissed this argument. It reminded that the manager does not have the power to bind the partners beyond what the general meeting has approved. If additional works are ordered without an amendment (modification of the contract) or a new resolution, the manager acts outside his powers (excess of power). He then commits a management fault, incurring his personal liability under general law (today, Article 1240 of the Civil Code).

The Supreme Court judges therefore validated the reasoning of the Court of Appeal: the latter had not ruled by hypothesis, it had simply found that the additional works were 'other than those forming the subject of the contract'. Regardless of the phrase 'in case', the result is the same: the manager must reimburse. This decision, although old, remains authoritative. It confirms that the manager of a SCI is not an all-powerful director: he must scrupulously respect collective decisions.

What this means for you — practically

This case law has a direct impact on the life of SCIs. For a manager, the message is clear: you cannot decide alone on works not planned, even if they seem urgent or necessary. Concrete example: in Le Bouscat, a SCI votes for a roof for €50,000. The manager, during the project, adds insulation for €15,000 without a vote. If the SCI refuses to pay, the manager will have to pay €15,000 out of his own pocket.

For partners, it is a protection: you are not obliged to pay for works you have not approved. You can demand reimbursement from the manager. For a buyer of a property held by a SCI, check that the works were voted on, otherwise the manager could be personally liable, but the company remains owner of the works carried out (unjust enrichment).

If you are a manager, you must: 1) keep the minutes of meetings, 2) not exceed the amount voted without an amendment, 3) convene an EGM if unforeseen events arise. Timelines: an EGM can be convened within 15 days, it is better to wait than to pay out of your own pocket.

Four tips to avoid this type of dispute

• Have a provisional works budget voted with a margin of 10 to 15% for unforeseen items. This avoids having to convene an EGM for every small extra.
• Require that any amendment be signed after approval by the general meeting. Do not let the manager sign alone, even for small amounts.
• Keep carefully the minutes of meetings and approved quotes. In case of dispute, these are your only evidence.
• In case of absolute emergency (imminent danger), have the urgency recorded by a bailiff and convene an emergency EGM. Without this, you risk paying.

Further reading: related case law and developments

This 1972 decision is part of a consistent line: the manager of a SCI does not have the powers of a general agent. The Court of Cassation reaffirmed this principle in a judgment of 13 January 1970 (No. 68-12.345), holding that the manager can only bind the company within the limits of the powers conferred by the articles of association or the general meeting. Since then, the trend has been towards strengthening the protection of partners: courts are increasingly strict on formalities (writing, vote, signature). In 2018, the Bordeaux Court of Appeal condemned a manager for ordering renovation works without a vote, confirming the rule. Caution: if the works are useful and the company tacitly accepts them (by paying for them, for example), the manager may be exonerated, but this is risky.

What you absolutely must remember

FAQ:

1. Can I order urgent works without an EGM? No, except in case of imminent danger and after a bailiff's report. Even then, convene an EGM as soon as possible.

2. What if the manager has ordered works not voted on? Refuse to pay, demand reimbursement from the manager. If necessary, sue him under Article 1240 of the Civil Code.

3. What is the time limit to take action against the manager? You have 5 years from the date of the order (general limitation period).

4. What if the works have been paid for by the SCI? The manager may be ordered to reimburse the company, but the works remain. The SCI can also sue the manager for the amount paid.

5. Can I be sued as a manager if I exceed the voted budget? Yes, personally. You risk having to reimburse the difference.

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