Frequently asked questions about the gift agreement

Chapters of the article

• How to establish an “easement” for survivorship
• How to revoke a gift
• How to secure care from the donee “in exchange” for a gift of real estate
• What about gift tax
• Is it possible to register multiple properties at the same time?

Most often, parents or grandparents negotiate when they give the property they live in to their children or grandchildren. note: “Easement” is a designation used today mainly by the Land Registry, easements are one type of such corresponding easement (otherwise the Civil Code no longer uses “easement”, instead there is a similar umbrella term “right in rem”).

How to establish an “easement” for lifetime

Most often, we prepare a so-called easement of usufruct for a specific person, for the lifetime of such beneficiary. This means that this person (typically the donor, but we have also seen easements prepared for the donee’s mother and her partner) has the right to use the property for the duration of his or her lifetime, even though someone else already owns it due to the gift.

The easement is both agreed in the contract and registered in the land register (this protects the donor in case the donor loses the property due to foreclosure – the right to use the property is not affected). For the purposes of the Land Registry, however, it is necessary to describe the easement accurately enough so that there is no problem with its registration; we submit the proposal for registration of such an easement in the same proposal for entry into the Land Registry as the donation itself – i.e. we deal with it all at once.

We then regularly add specific conditions to such an easement in the contract to specify it. For example, that the easement includes the right to receive visitors in the donated property, that such an easement is negotiated free of charge, i.e. the donor does not have to pay anything for it, or, especially when it comes to the donation of an apartment, then a detailed specification of who, when and how will pay the payments for the apartment (utilities, house management fees, etc.). This will avoid possible misunderstandings about the most common issues that may arise with the actual operation of the easement.

How to revoke a gift

There are two “typical” situations under the law where a gift can be revoked by the donor – for the purposes of the contract, these reasons can be reiterated in the contract, but the Civil Code protects the donor by stating that even if the donor waives the right to revoke the gift for these reasons in the gift contract, this will not be taken into account (i.e., as if it did not happen, these two situations cannot be avoided).

For cases where the donee will try to “get rid of” the donated property, e.g. transfer it to another person so that he does not have to return it, the law provides as follows. The donee is obliged to give away at least what he still has of the gift or its full value, i.e. what is left. However, there is an exception to this, where he will be obliged to return the entire property: if he transferred it precisely to avoid this consequence in the event of revocation of the gift or if the revocation was made by the donor and for the so-called ingratitude of the donee.

The two situations for revocation are as follows:

• So-called ingratitude, or revocation for ingratitude: the donee has“intentionally or grossly negligently wrongedthe donor in such a way as to manifestly violate good morals“. This could be, for example, if the donee fails to help a seriously ill donor or if, for example, the donee commits a crime against the donor. It is possible to appeal for ingratitude even if a person close to the donor has been harmed in this way, but in this case it will be. If the donation has already been given, the donor has the right to demand the return of the entire gift and, if this is not possible, payment of its normal price.
• So-called hardship revocation: the donor falls into financial distress and has neither the necessary maintenance nor the necessary maintenance of himself or of the person to whose maintenance he is legally obliged; he may then revoke the gift and demand that the donee return the gift or pay its normal price. At most, however, the revocation shall apply to that part of the gift or its value in which the donor does not have the means of necessary maintenance.

How to secure care from the donee “in exchange” for the gifted property

We handle what is known as a real easement, which is sort of like a “reverse” easement – when an easement is negotiated, the donee is obligated to tolerate “his” property being used by someone else; with a real easement, the donee is obligated to actively act as agreed in the gift agreement.

An example of this was the real burden we prepared for one of our clients, which served as a so-called exchange. The gist of it was that the donor, an elderly lady, in addition to the easement of usufruct, had a real burden inserted in the contract, according to which the donee (her daughter) was to provide or arrange for her care in old age, and even to provide care personally in the event of deterioration of her health.

What about the gift tax

When transferring real estate, the main thing to be concerned with is income tax ( the tax on the acquisition of immovable property was abolished several years ago). In the past, only the transfer of property for consideration was subject to tax, so gifting is not.

With regard to income tax (which is assessed when ordering the drawing up of a gift deed), gifts from, for example, a relative in the direct or collateral line are exempt from tax, if the relative is a sibling, uncle, aunt, nephew or niece, a spouse, a child of a spouse, a child of a spouse, a parent of a spouse, or, in some cases, a person with whom the donee lives in the same household.

Is it possible to register more than one property at the same time?

We regularly draw up contracts that relate to several different properties (e.g. an apartment and a separate parking space next to it, or several different plots of land); we have also drawn up contracts that relate to only part of a property (e.g. parents wanting to give half of the house to their children but still keep half). However, it is not always possible to create e.g. an easement on all the properties together – typically it can only be created if the donor is the sole owner.