Unnecessary mistakes in the gift agreement

Mrs Kamila downloaded a model gift agreement from the internet, which she slightly modified and completed. The result? She lost her flat worth three million crowns. Almost everything related to the donation of real estate can be done conveniently from home without any risk.

5 minutes of reading

The donation that failed

Mrs. Kamila took care of her sick grandmother for many years. However, she was not her real grandmother, but a neighbour. Kamila only helped her until it became a daily care. Although Kamila did not expect it at all, her grandmother decided to give Kamila her apartment. The old lady was not well with her family, who did not care for her at all.

But the problem was that Mrs. Kamila did not consult anyone. She downloaded an old model of a property donation contract from the internet, filled it out incompletely and this is how she and her sick grandmother signed the contract and submitted it to the land registry.

It turned out, however, that Kamila had incorrectly marked her share in the common parts of the house. Instead of a fraction, she had filled in square metres for the size of the share. She had also forgotten to indicate the share in the related land around the house, i.e. the garden.

Because of the error, the Land Registry stopped the proceedings and rejected the gift agreement. In the meantime, however, the old lady had died and her flat had passed to her heirs in the inheritance proceedings. Mrs. Kamila was thus left with a very expensive lesson according to a popular saying – one acquires easily, one loses easily.

Donation of real estate

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.

Tip: Donating a property brings with it a number of questions. How to do everything legally? When to add an easement to the contract, and what happens if the donation has not gone according to plan? Not only these questions can be answered in a separate article.

The contract is the basis

It will probably come as no surprise to you that a properly drafted gift agreement is the foundation. One small mistake can drag the whole process out or even stop it altogether. As we have seen in practice, templates downloaded from the internet can contain a number of errors and outdated information. Ideally, you should consult an attorney or other legal professional about drafting a gift agreement.

It is also essential that the signatures on the contract are certified by a notary, lawyer or Czech Point employee. The only exception to this are those who have their signature deposited as a specimen directly at the Land Registry. In this case, it is not necessary to verify the signature.

What to watch out for

However, there are several possible errors in the submission to the Land Registry and some of them may lead to the rejection of the proposal and the need to sign a new contract.

  • When transferring (i.e. even gifting property) flats, properties are transferred on multiple title deeds, which is often forgotten.
  • Each share must be specifically identified, not forgetting both the share in the land on which the house and flat stand and the share in the house itself.
  • In connection with the new Civil Code, the apartment is defined differently than before, which can also lead to an error at the land registry. Especially if it is based on the old contract.
  • The house is not necessarily part of the land even today, so you may find that only the land without the house or the house without the land is transferred to your ownership by mistake.

Donation of real estate and inheritance proceedings

If the donor dies within three years of the transfer of the property, this may be reflected in the subsequent succession proceedings. The donated property is included in the mandatory share of the inheritance. If the share of the inheritance is subsequently less than the value of the donated property, there is no further entitlement to the estate. As an example, consider three siblings, one of whom has received a family cottage as a gift. The parent who gave the cottage subsequently dies and leaves an estate worth CZK 600,000. Normally, each of the siblings would inherit a share of CZK 200 000, but because one of them received the cottage at a much higher value, only the remaining two siblings will share the estate.

Tip: Thousands of pages and many articles and books have been written about buying, selling, renting or donating real estate. However, there are also many other ways to dispose of real estate that are less written about. You may have come across property leasing, but such land swaps have become rather rare. We discuss both transactions in more detail in our next article – Less common real estate contracts.

Don’t forget to pay your taxes

The transfer of the property is not usually the end of the story. The donee still has to sort out any financial obligations to the state that may arise from the acquisition of the property.

Although gift tax has been abolished,income from gifts is still part of the normal income tax, which is 15% for individuals and 19% for corporations. The relationship between the donee and the donor also plays a role in the calculation of the tax. If the property “remains in the family”, the donee is also exempt from this tax.

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Donation of real estate

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.

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

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.

Education
  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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