Legal Definitions - en déclaration de simulation

En déclaration de simulation is a term used in civil law systems to describe a specific type of legal action.

It refers to a lawsuit initiated to challenge and invalidate a transaction or contract that, on its surface, appears legitimate but is actually a mere pretense or a "simulation." The core purpose of this action is to reveal the true legal reality behind a deceptive appearance, proving that the apparent transaction was never intended to have its stated legal effects. Instead, it was designed to conceal a different reality or to achieve an ulterior motive, such as avoiding creditors, taxes, or other legal obligations. When successful, the court declares the simulated transaction void, restoring the legal situation to what it truly was before the pretense.

Here are some examples illustrating how en déclaration de simulation might be applied:

• Example 1: Avoiding Creditors through a Sham Sale

  Imagine a business owner, Sarah, is facing significant debt and potential lawsuits. To protect her valuable vacation home from creditors, she "sells" it to her brother, Mark, for a ridiculously low price – far below market value. However, Sarah continues to use the home, pay its expenses, and make all decisions regarding the property, while Mark never actually takes possession or exercises any real ownership rights. This "sale" is a simulation; it's a pretense designed to make it appear as though Sarah no longer owns the property. A creditor, discovering this arrangement, could initiate an en déclaration de simulation action to prove that the sale to Mark was not a genuine transfer of ownership. If successful, the court would declare the sale void, allowing the creditors to pursue the property as part of Sarah's assets.

• Example 2: Disguised Donation to Circumvent Inheritance Rules

  Consider an elderly parent, Mr. Chen, who wishes to give a significant piece of land to one of his children, Li, while effectively disinheriting his other child, Mei. To avoid inheritance taxes or to bypass legal rules regarding equal distribution among heirs, Mr. Chen "sells" the land to Li for a nominal sum, perhaps just a few dollars, even though the land is worth hundreds of thousands. Both Mr. Chen and Li understand that this is not a true sale but a disguised donation. After Mr. Chen's passing, Mei discovers this transaction. Mei could bring an en déclaration de simulation action to argue that the "sale" was a sham and was, in fact, a donation. If the court agrees, the transaction would be reclassified as a donation, potentially bringing it back into the estate for proper distribution according to inheritance laws, or subject to gift taxes.

• Example 3: Hiding True Ownership in a Business Deal

  A developer, Corporation X, wants to acquire a specific parcel of land for a controversial project, but they anticipate strong public opposition if their involvement is known. To avoid scrutiny, Corporation X sets up a shell company, "Front Properties Inc.," with no real assets or operations, and has Front Properties Inc. purchase the land. The public believes Front Properties Inc. is an independent entity, but in reality, Corporation X controls every aspect of Front Properties Inc. and is the true beneficial owner of the land. If a local community group or a competitor suspects this deception and can gather evidence that Front Properties Inc. is merely a front for Corporation X, they could potentially initiate an en déclaration de simulation action. The goal would be to expose Corporation X as the true purchaser and owner, thereby allowing the community to address their concerns directly with the actual party responsible for the controversial project.