Glossary
The words of French property valuation, with their source
85 terms you will meet in a valuation report, a notarial deed, a lease or a court decision in France. Each definition cites the text it comes from and points to the related service.
By theme: Inheritance, partition and divorce (12) · Property sales and warranties (4) · Commercial rent (13) · Eviction and occupation indemnity (6) · Businesses, company shares and hotels (6) · Compulsory purchase and urban pre-emption (9) · Neighbours, easements and co-ownership (4) · Tax (2) · Valuation practice and methods (29)
A
- Abatement of gifts (réduction des libéralités)Mechanism that cuts back gifts and legacies exceeding the disposable portion to the permitted amount, in order to restore the heirs' forced heirship share; it is carried out in value by an indemnity.
- Abnormal neighbourhood disturbance (trouble anormal de voisinage)Strict liability of a person who causes neighbours an inconvenience beyond what living side by side normally requires them to bear, codified in article 1253 of the French Civil Code.
- Allowance (abattement)Reduction applied to a value or to a tax base, either fixed by statute (main residence, French wealth tax) or justified by the valuer to reflect a particular feature of the property.
- Article 1843-4 of the French Civil CodeProvision which allows, where the value of company shares is disputed on a transfer or buy-back, that value to be fixed by an expert chosen by the parties or appointed by the court.
B
- Bare ownership (nue-propriété)Ownership of a property stripped of its use and income, which belong to the usufructuary; the bare owner recovers full ownership when the usufruct ends.
- Business as a going concern (fonds de commerce)All the tangible and intangible elements (clientele, trading name, leasehold right, equipment, stock) that a trader brings together to run a business, valued as a whole.
- Business disruption (trouble commercial)Ancillary head of eviction or compulsory purchase compensation that offsets the disruption to the business (interruption, disorganisation, temporary downturn) caused by the trader's forced departure.
C
- Capitalisation rate (taux de capitalisation)Ratio between the annual income of a property and its market value net of purchase costs; it converts a rent into a value in the capitalisation method.
- Capped rent (loyer plafonné)Rent of a renewed French commercial lease whose variation is limited to that of the index (ILC or ILAT) since the rent was first set, under article L. 145-34 of the Commercial Code.
- Carrez floor area (surface Carrez)Private floor area of a co-ownership lot, measured under the Carrez Law, which must appear in every deed of sale and whose shortfall of more than one twentieth gives a right to a price reduction.
- Commercial rents index (indice des loyers commerciaux, ILC)Quarterly index published by INSEE which serves as the reference for the indexation and capping of French commercial lease rents, alongside the ILAT for tertiary activities.
- ComparableRecent transaction involving a property similar to the one being valued, whose price, once adjusted for the differences, serves as a reference for establishing market value or rental value.
- Comparison method (méthode par comparaison)The reference approach for market value: it derives the value of a property from the prices of recent transactions in similar properties, adjusted for their differences.
- Compensation between spouses (récompense)Sum owed, on the liquidation of a community of property, by a spouse to the community or by the community to a spouse, where one has benefited from the assets of the other; calculated on the remaining benefit.
- Compulsory purchase (expropriation)Procedure by which a public body compels an owner to transfer a property to it for a scheme in the public interest, against fair compensation paid in advance.
- Court-appointed expert (expert judiciaire)Specialist registered on the list of a French Court of Appeal or of the Cour de cassation, appointed by the judge to inform the court on a question of fact; in property valuation, heading C.18.
- Court-ordered sale of joint property (licitation)Auction sale of jointly owned property that cannot conveniently be divided or allocated to one co-owner, ordered by the court or agreed by the co-owners, the price then being shared between them.
- Critical review of a valuation report (seconde lecture)Critical examination, by an independent expert, of another professional's valuation report, to check its compliance, data and reasoning, without producing a new value.
D
- DCF (discounted cash flow)Valuation method which adds up the present value of all the future cash flows of a property over a holding period, together with its resale value at the end of that period.
- Declaration of public interest (déclaration d'utilité publique, DUP)Administrative decision, taken after a public inquiry, which recognises the public interest of a scheme and authorises the compulsory purchase of the properties needed to carry it out.
- Depreciated replacement cost (coût de remplacement déprécié)Cost of building a modern equivalent of equal utility, land included, less physical, functional and economic depreciation, used to approach the value of a property for which there is no market.
- Desktop valuation (avis de valeur)Light-touch estimate which states a value without full demonstration, often without inspection or on documents alone; it differs from a full valuation report in scope and in weight.
- Discount (décote)Reduction applied to the value of a property or a right to reflect a feature that lowers its price on the market: occupation, joint ownership, illiquidity, works, easement, forced sale.
- Discount for occupation (décote pour occupation)Reduction in the value of a let or occupied property compared with its vacant-possession value, reflecting the loss of availability, the level of the rent and the protection the occupier enjoys.
- Discount rate (taux d'actualisation)Rate that converts future cash flows into present value; it reflects the return investors expect for the risk and the duration of the investment.
- Disposable portion (quotité disponible)Fraction of an estate that a person may freely dispose of by gift or will, once the forced heirship share of the protected heirs has been deducted; it is calculated on the mass defined in article 922.
- Division of ownership (démembrement de propriété)Division of the ownership of a property between a usufructuary, who has its use and income, and a bare owner, who keeps the capital and recovers full ownership when the usufruct ends.
E
- Equalising payment (soulte)Sum paid by a party to a partition who receives a lot worth more than their entitlement, to restore equality in value; its calculation depends on the value of the property on the day of partition.
- Eviction compensation (indemnité d'éviction)Sum owed by the landlord to a commercial tenant whose lease it refuses to renew, equal to the loss caused by the non-renewal (article L. 145-14 of the French Commercial Code).
- Expropriation judge (juge de l'expropriation)Judge of the French judicial court who transfers ownership by order and fixes compulsory purchase compensation or the pre-emption price where no amicable agreement is reached.
F
- Fair value (juste valeur)The price that would be received to sell an asset in an orderly transaction between market participants at the valuation date, an accounting concept defined by IFRS 13.
- Forced heirship share (réserve héréditaire)Part of the estate that the law guarantees to the descendants, or to the surviving spouse where there are no descendants, and of which the deceased could not deprive them by gift or will.
- French commercial lease (bail commercial)Lease of premises in which a commercial, craft or industrial business is carried on, governed by the protective statute of articles L. 145-1 et seq. of the French Commercial Code.
G
- Government commissioner (commissaire du gouvernement)Official of the French public finance administration who, before the expropriation judge, presents a valuation of the property and submissions on the compensation, separate from those of the parties.
- Green value (valeur verte)Expression for the effect, positive or negative, of energy performance and environmental criteria on value; the Charte specifies that it does not exist as a stand-alone value.
H
- Habitable floor area (surface habitable)Built floor area of a dwelling, after deduction of walls, partitions, stairs, ducts and openings, excluding unconverted lofts, cellars, garages, balconies and parts below 1.80 metres in height.
- Hidden defect (vice caché)Defect in the thing sold, not apparent at the time of the sale and pre-dating it, which makes it unfit for its use or reduces that use to the point that the buyer would have paid less.
- Hotchpot of gifts (rapport des donations)Obligation on an heir who received a gift as an advance on their share to bring it back into the mass to be divided, at its value on the day of partition according to the condition of the property on the day of the gift.
I
- Illiquidity discount (décote d'illiquidité)Discount applied to the mathematical value of company shares to reflect the difficulty of selling them: narrow market, approval of the other shareholders required, no listing.
- Income method (méthode par le revenu)Approach that derives the value of a property from its capacity to produce income, by capitalising a rent or by discounting future cash flows.
- Indexation clause (clause d'échelle mobile)Clause in a French commercial lease which automatically varies the rent, on a fixed date, in line with an index (ILC, ILAT), without any action by the parties; also called an index-linking clause.
- Investment value (valeur d'investissement)Value of a property to a particular owner or prospective buyer, calculated according to their own investment criteria, which may depart from market value.
J
- Joint ownership (indivision)Situation in which several people own the same property together, each for an abstract share, without any physical division; no one can be compelled to remain in it.
- Joint private valuation (expertise amiable conjointe)Property valuation commissioned together by two or more parties, who choose the valuer, attend the operations and receive the same report, without the involvement of a judge.
L
- Land value for development (charge foncière)Amount a developer can devote to acquiring a site or a building to be converted, usually expressed per m² of permitted gross floor area; the outcome of the residual method.
- Leasehold right (droit au bail)Value of a commercial tenant's right to occupy premises on the terms of its lease; it corresponds to the price a successor would pay to take over that lease (Charter, Title III § 1.18).
- Lesion (lésion)Imbalance between the price of a property sale and its real value; when the seller has received less than five twelfths of that value, the seller may apply for rescission (French Civil Code article 1674).
- Litigation support (assistance à expertise)Engagement under which a property valuer advises one party during a court-ordered expert appraisal: preparing documents, attending meetings, drafting written observations, analysing the report.
- Local commercial factors (facteurs locaux de commercialité)Features of the surroundings (town, district, street, transport, neighbouring trades) which determine the attractiveness of a location for a given business, defined at article R. 145-6 of the French Commercial Code.
- Loss of enjoyment (perte de jouissance)Loss suffered by the owner or occupier who is deprived, wholly or in part, of the normal use of the property for a given period; it is quantified separately from the loss of value.
- Loss of value (moins-value)Difference between the market value a property would have had without a harmful event and its actual market value with that event; it is the measure of lasting property loss.
- Loss of value of the retained land (dépréciation du surplus)Loss of value suffered, on a partial compulsory purchase, by the part of the property the owner keeps: it is compensated as an ancillary head of claim, in addition to the land taken.
M
- Market value (valeur vénale)Estimated amount for which a property would exchange at the valuation date between a willing buyer and a willing seller, after proper marketing.
- Material change (modification notable)Significant change, occurring during the expired lease, in the characteristics of the premises, their permitted use, the parties' obligations or local commercial factors, justifying the uncapping of the rent.
- Minority discount (décote de minorité)Discount applied to the value of company shares that do not confer control: the minority shareholder decides neither distributions, nor sales, nor management.
- Mortgage lending value (valeur hypothécaire)Value of a property assessed conservatively, on the basis of its lasting characteristics and stabilised income, to serve as security for a long-term loan.
P
- Preferential allocation (attribution préférentielle)Right of a co-heir or co-owner, on a partition, to be allocated a specific asset (home, business, farm), subject to paying an equalising payment calculated on its value at the date of partition.
- Preliminary report (pré-rapport)Provisional document by which the court-appointed expert communicates findings and proposed conclusions to the parties, before the final report, in order to collect their written observations.
- Principal compensation (indemnité principale)Central element of French compulsory purchase compensation, corresponding to the market value of the expropriated property in its state of occupation, to which ancillary heads are added.
- Property loss (préjudice immobilier)Loss of value or of enjoyment suffered by a property as a result of an external event (neighbouring construction, defect, hidden defect, nuisance), quantified so that it can be compensated.
- Property valuation report (expertise en évaluation immobilière)Service of a qualified valuer who determines the value of property and property rights by analysing the legal, economic, technical and tax factors, under a contract, with an inspection and a report.
- Prudent value (valeur prudente)Conservative valuation of a property given as security for a loan, made under prudent criteria that exclude any expectation of price increases, in application of the revised CRR regulation.
R
- Rebuilding cost (valeur de reconstruction)Cost of rebuilding the buildings and fixed equipment as new, professional fees and technical costs included, established on a like-for-like or equivalent basis from quotes or ratios.
- Reference date (date de référence)In French compulsory purchase and pre-emption, the date at which the actual use of the property and the planning rules applicable to it are frozen for the calculation of the compensation or the price.
- Reinvestment allowance (indemnité de remploi)Sum added to the principal compensation on compulsory purchase to cover the costs of acquiring a replacement property (transfer duties, fees, deed costs), calculated in bands.
- Relocation compensation (indemnité de transfert)Eviction compensation due when the commercial tenant can reinstall its business elsewhere without losing its clientele: it covers the leasehold right and the costs of the move.
- Renewal rental value (valeur locative de renouvellement)Rent at which a French commercial lease must be renewed under the criteria of article L. 145-33 of the Commercial Code, distinct from market rent because it takes account of the terms and charges of the lease.
- Rent smoothing (lissage)Phasing of the rent increase resulting from uncapping: the increase may not exceed, in any one year, 10 % of the rent paid the previous year (French Commercial Code article L. 145-34).
- Rent uncapping (déplafonnement)Situation in which the rent of a renewed French commercial lease escapes the index cap and is fixed at the rental value, on one of the grounds provided by article L. 145-34 of the Commercial Code.
- Rental value (valeur locative)Annual rent that a property could reasonably obtain, at the date of the valuation, under a new lease concluded on the usual market terms.
- Replacement compensation (indemnité de remplacement)Eviction compensation due when the commercial tenant loses its business because it cannot be relocated: it is calculated on the market value of the business (article L. 145-14).
- Residual method (bilan promoteur)Method which derives the value of a site or of a building to be redeveloped from the value of the completed scheme, less all the costs needed to deliver it and the developer's margin.
- Restated net asset value (actif net réévalué)Value of a company obtained by replacing, on the balance sheet, the book value of the properties with their market value and then deducting the debts; the starting point for valuing SCI shares.
- Right of option (droit d'option)Right of the landlord or the tenant to refuse renewal of a French commercial lease within one month of the final fixing of the renewed rent (article L. 145-57 of the Commercial Code).
- Right of pre-emption (droit de préemption)Right of a local authority or public body to step into the shoes of the buyer of a property put up for sale, at a price that may be fixed by the expropriation judge.
S
- SCI shares (parts de SCI)Shares representing a member's rights in a French property-holding company; their value is derived from the company's net assets, after discounts specific to the shares and not to the buildings.
- Specialist assisting the expert (sapiteur)Technician from a different speciality than the court-appointed expert, whose opinion the expert obtains on a question outside the expert's own competence, under the expert's responsibility (article 278 CPC).
W
- Weighted floor area (surface pondérée)Floor area of premises reduced to a standard area by applying coefficients that reflect the commercial usefulness of each zone (front sales area, back shop, storage, upper floors).
- Written observations to the expert (dire)Written observation that a party sends to the court-appointed expert during the expert's operations, to which the expert must respond in the report (article 276 of the French Code of Civil Procedure).
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