What is a donation?
The law defines a donation as “a contract by which the donor immediately and free of charge transfers something to the donee, who accepts it” — Article 225 of the Obligations and Contracts Act (OCA).
A donation is a contract, because it is “an agreement between two or more persons to create, regulate, or terminate civil rights and obligations.” In this case, there is an agreement/consent between two persons (the donor and the donee) for the real estate property to pass into the ownership of the donee. Their intention is aligned.
The donor transfers the property “immediately,” i.e., at the moment the donation is made, and not at a future time; otherwise, the donation has no effect. This is also supported by Article 226 of the OCA: “A promise to make a donation has no legal effect.”
Only property that belongs to the donor at the time of the donation may be the subject of the transfer. If, for example, the donor “donates” a property that they have not yet purchased or acquired in another way, but intend to acquire in the near future, that “donation” is void. A void donation is treated by law as a legal nullity — as if it does not exist — and therefore produces no legal effect or consequences. In such a case, the donor does not transfer what they intend to acquire, and the donee does not become the owner.
A donation must be gratuitous (free of charge). When making a donation, the donor should not expect any financial benefit and must clearly understand that they are transferring ownership without receiving any payment, and without expecting the donee to assume a financial obligation in the donor’s favor.
Donation with a burden (condition)
The law allows for a donation with a burden. In this case, the donation contract becomes bilateral, meaning each party has corresponding rights and obligations. The purpose of such a donation is for the donor to transfer ownership of the real estate property, on the condition that the donee must give something, do something, or refrain from doing something.
However, the burden must be possible, i.e., the obligation the donee undertakes must be objectively capable of being fulfilled. Otherwise, the law declares the donation void, and it produces no effect.
If the donee fails to perform the burden, the donor has the right to request termination (rescission) of the contract under Article 87 of the OCA, because:
“When the debtor (the donee) under a bilateral contract fails to perform their obligation for a reason for which they are responsible, the creditor (the donor) may terminate the contract by granting the debtor an appropriate period for performance, with a warning that after the expiry of that period the contract will be considered terminated.”
In addition to the cases above, a donation is also void where the donation itself, or the sole motive for making it, is contrary to the law or to good morals. By “good morals,” the legislator understands morality/ethical standards.
What are the consequences of a void donation?
If a court declares the donation contract void, it is considered that the legal consequences of the transfer never occurred — the donee did not become the owner of the donated property. If the donee has used the property as if it were their own, they did so as a non-owner, and they may owe compensation to the owner for the period during which the owner was deprived of the ability to use the property.
Who can be a donor and who can be a donee?
A donor may be any legally capable natural person who owns the real estate property. This means a person who:
- has reached legal age (a donation made by a minor is void),
- is mentally competent, and
- is not restricted by a court in their legal capacity.
A donor may also be a legal entity (company). In both cases, the donor may be represented by a power of attorney.
A donee may be any person, regardless of whether they have reached legal age, provided that if they are under 18, they are properly represented.
What documents are required?
The documents required for a donation must meet the same requirements as a sale, including:
- a title deed proving the donor is the actual owner of the property,
- a sketch / cadastral scheme,
- a tax valuation,
- construction documents where necessary, and
- other documents depending on the specific case.
If you have questions, do not hesitate to contact us for a consultation.
What are the costs of transferring property by donation?
The costs of the notarial procedure are usually paid by the donor, but there is no prohibition on sharing them between the donor and the donee.
When donating property, the following fees are due:
Notary fees
The notary fee is determined according to the material interest (the value of the property).
* Please note that VAT is added to the notary fee, meaning you must add 20% to the fee amount.
Local tax (municipal tax)
This tax is determined according to the ordinance of the municipality where the donation is made, so the rate may vary. The parties involved also matter:
- 0% (no tax) — donations between direct-line relatives (parents, children, grandchildren) and between spouses
- 0.7% — donations between brothers and sisters and their children
- 5% — donations between persons outside the categories above
Please note that the rates listed above apply to Sofia.
Registration fee
This fee is paid to the Registry Agency in the amount of:
- 0.1% of the material interest (the value of the property)
For consultation and full assistance throughout the process of donating real estate property, contact us today via our contact details.
If you wish to learn what the costs are when selling real estate property, you can do so here, and you can also use our calculator for easier calculation.
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