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SAFER and the Gift of Property

In order to thwart the rural land agency SAFER of their right of pre-emption a couple decided on a simple solution - to give away the land they had proposed to sell.

We have reported before on the ethical standards and commercial practices of the French rural land agency, SAFER (Société d'aménagement foncier et d'établissement rural, a body whom even the French national auditors have called 'self-serving'.

It is, therefore, with no small amount of satisfaction to come across an instance where two land owners were not prepared to be railroaded by them in the sale of their property, using a mechanism that disenfranchised SAFER from the transaction.

In the case, sellers living in the Provence-Alpes-Côte d’azur region agreed terms for the sale of agricultural land to a couple for the sum of €30,000.

As is required by the sale process, the notaire duly notified the SAFER regional office of the planned sale, in response to which SAFER stated they wished to use their right of first purchase (droit de pre-emption), but proposing a substantially lower purchase price of €8,000.

The sellers were unwilling to dispose of the land at this price, so they simply withdrew their property from the market, as they were entitled to do; if the property is not for sale no power of first purchase can be used by SAFER.

Approximately ten months later the couple proceeded to gift the land to the original buyers, with the value specified in the gift transfer of €8,000, the value estimated by SAFER themselves.

SAFER have no right of pre-emption in the gift of property, so were unable to intervene in the transaction; the couple did not deny that the reason they had decided to give away the land was simply to circumvent the SAFER right of first purchase.

In addition, the effect of such a low valuation is to reduce the stamp duty taxes and notaire fees that are payable.

SAFER decided to seek annulment of the transaction in the French courts, claiming that, in preventing them use of their right of first purchase and simultaneously lowering the taxes that were payable, it was fraudulent.

The French Supreme Court, to whom SAFER made a final appeal, disagreed, ruling that although the effect of the gift transfer was to deny SAFER their right of pre-emption, this was itself not fraudulent and only of secondary consequence.

It was a matter for the owners to decide how they wished to dispose of their property, and neither the denial of a right of pre-emption or lower taxes amounted to an act of fraud.

SAFER were ordered to pay €3,000 costs to the couple.

POSTSCRIPT: The law has since been tightened up to give SAFER a right of pre-emption on gifts outside of family members.

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This article was featured in our Newsletter dated 05/09/2016

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