Protect your home as a sole trader
While plans are in hand to make protecting your assets easier, the current process is a déclaration d’insaisissabilité
DRAWING up a déclaration d’insaisissabilité can be a useful precaution for sole traders including auto-entrepreneurs, says notaire François Trémosa. Mr Trémosa, of the Groupe Monassier in Toulouse, said those setting up in business for themselves should be aware there are risks involved.
“You will be personally liable without limit for all activities that you will carry out as an entrepreneur.
“However, you could protect your assets by signing a so-called declaration d'insaisissabilité (declaration that something cannot be seized as part of legal action by creditors).
The déclaration d'insaisissabilité was created by the law of August 1, 2003, and its scope has just been extended by the law of August 4, 2008.
In order to encourage the creation of businesses, government decided to protect all real estate belonging to an individual entrepreneur other than that used by and for the business. Therefore, the main residence, as well as secondary residences can now be protected.
The conditions to benefit from that protection are:
To be an individual entrepreneur as only those can benefit from the protection.
A partner or a shareholder cannot benefit from it, even if he or she, as a partner, is jointly and personally liable for the company debts (for example in the case of a partner of a société civile immobilière for instance)
The entrepreneur must have a professional activity (for example: farming, selling, carrying out a craft or trade or acting as an independent professional such as a lawyer or consultant).
The protection can apply to all your real estate located in France and directly owned by you, except for the real estate used for your business.
If you are a home worker, your home real estate should be protected, but speak with your notaire to make sure this can be applied in your case.
The deed has to be drawn by a notaire in order for it to be valid. The cost is of about €650. This includes the necessary formalities which will be carried out by the notaire, as the deed has to be published in the land registry (so that the asset cannot be seized) and in a local newspaper (journal d'annonces légales).
Once these formalities have been carried out, no creditor can seize the assets protected by the declaration for new debts (ie. debts generated after the declaration).
However, for the debts which originated before the declaration, the entrepreneur is not protected, hence it is useful to make the declaration as early as possible.
