What are the things you need to remember if you want to give someone a gift? As a donor, what can you reserve for the recipient? We have prepared an overview of the most common questions that our clients contact us with during the preparation of gift agreements.
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”).
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 will provide you with a complete legal service related to real estate donation, including a proposal for entry into the Land Registry. We will also advise you on how to deal with taxes in the most advantageous way. We will handle everything quickly and flawlessly, so you don’t have to worry about a thing. You can pay after the service has been provided.
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.
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:
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.
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.
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.
We will provide you with a complete legal service related to real estate donation, including a proposal for entry into the Land Registry. We will also advise you on how to deal with taxes in the most advantageous way. We will handle everything quickly and flawlessly, so you don’t have to worry about a thing. You can pay after the service has been provided.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
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