By its nature, a donation is a gratuitous transfer of property, but that does not mean the transaction is risk-free.
Donation can be challenged by heirs entitled to a reserved share (Art. 30 of the Inheritance Act)
The Inheritance Act provides that certain statutory heirs of the deceased have a reserved share of the inheritance. In this way, the legislator has tried to guarantee the rights of descendants, parents and/or the spouse of the deceased. When an heir entitled to a reserved share cannot receive it from the inheritance because it has been reduced as a result of wills and/or donations, the heir has the right to seek reduction of them to the extent necessary to supplement his/her reserved share. An exception is customary gifts, but the transfer of real estate by donation does not fall into that category.
The legislator has provided a procedure for reducing testamentary dispositions and donations: donations are reduced only after the bequeathed property is exhausted, starting from the latest donations and moving successively to earlier ones, pursuant to Art. 33 of the Inheritance Act. This in itself gives the donee an opportunity to keep the donated property, but only insofar as the testamentary dispositions are sufficient to supplement the reserved share.
In this case, the claim to supplement the reserved share may be brought within five years from the opening of the inheritance.
Revocation of the donation (Art. 227 of the OCA)
The Obligations and Contracts Act gives the donor (or, in case of death, the heirs) the possibility to revoke the donation in certain cases. Art. 227(1) describes the cases in which revocation may be requested, namely:
- intentional killing or attempted killing of the donor, the donor’s spouse or the donor’s child, or participation as an accomplice in such a crime;
- falsely accusing the donor of a crime punishable by imprisonment of not less than three years;
- refusal to provide maintenance to the donor when the donor is in need.
This article considers only the third case—failure to provide maintenance.
The law refers not only to financial maintenance but also maintenance in kind (in this sense, Decision No. 67 of 01.02.2010 of the Supreme Court of Cassation in civil case No. 4166/2008, IV civil division). For it to be accepted that the donor needs maintenance, the donor must be unable to secure the necessary living conditions through his/her own property. This condition must also be lasting.
Is maintenance due in all circumstances? And accordingly, if it is not provided, can the donor immediately revoke the donation because of that?
The answer is no. The donee’s ability to provide maintenance must be assessed in each specific case. The Supreme Court of Cassation (SCC) in Interpretative Decision No. 1 of 21.10.2013 in interpretative case No. 1/2013, General Assembly of the Civil and Commercial Chambers, states: it cannot be regarded as ingratitude to fail to provide maintenance in cases where, if the donee were to provide such maintenance, the donee would put himself/herself and the persons he/she is legally obliged to support in a worse position than the donor. In this sense, the objective impossibility of the donee to provide maintenance to the donor in need is not grounds for revocation under Art. 227(1)(c) of the OCA. The SCC also clarifies that such maintenance must, as a rule, be requested by the donor; it is not due automatically unless the donor makes a claim for it. But “If such a need does not arise, or maintenance is not requested, the obligation of the donee to the donor remains moral and its non-performance is not sanctioned.” (quote from the same interpretative decision).
What is the procedure for the donor to request revocation?
The donor has a claim under Art. 227(3) of the OCA, which may be brought within one year from the time the grounds for revocation became known to the donor. If the donor dies within that period, the rights to revoke pass to the heirs. This period is preclusive, meaning after it expires, such a claim cannot be brought against the donee and the donation cannot be revoked. The one-year period cannot expire while there is an existing need for maintenance, regardless of how much time has passed since the donation was made.
The law does not generally regulate a maximum period within which one may “find out” about the grounds for revocation, but only a period after becoming aware. An important provision is contained in Art. 227(5) of the OCA, according to which “The revocation of the donation does not affect the rights acquired by third persons over the gifted properties before the statement of claim is recorded.” As a rule, the revocation claim has retroactive effect—restoring the situation as it was before the donation and returning the property to the donor’s patrimony or the inheritance estate. Art. 227(5) exists for legal certainty, to limit major shifts in rights and obligations and stabilize legal relations. These provisions allow a third person who has acquired the property from the donee in good faith—because they did not know or suspect a defect—who has possessed it, and five years have passed since the transfer, to acquire it by virtue of good-faith possession under Art. 79(2) of the Property Act.
What if the donee disposed of the donated property before a revocation claim was filed and cannot return it?
It is possible that the donee disposed of the property before a claim for revocation was brought and cannot return it. In that case, the donee is not released from liability; even though there is nothing to return, the donee owes compensation.
If, during court proceedings, one of the heirs withdraws from the claim, the donee (and respectively the persons in whose favor the donee disposed of the property after the donation) retains the portion of rights corresponding to the heir who withdrew. If the donee dies during the proceedings, the case continues against his/her successors, corresponding to the share of the inheritance that falls to them.
Financial consequences
The rights and obligations relating to the transferred property pass to the donee at the moment of the donation. Accordingly, if there are tax or other financial obligations connected with the property, they also become the donee’s burden and the donee becomes the new debtor.
In addition, a donation is difficult to oppose against the rights of the donor’s creditors. A creditor may request that actions by which the debtor prejudices the creditor be declared ineffective against the creditor, if the debtor knew of the prejudice when performing them. When the action is onerous, the person contracting with the debtor must also have known of the prejudice, whereas in a gratuitous disposition, the donee’s knowledge is not necessary.
Encumbrances
If real rights encumbrances (e.g., a mortgage) were established on the donated property before the donation, similar to financial obligations, they pass as a burden to the donee. This consequence follows from the legal principle that real rights follow the thing; it does not matter who holds it—in particular, the property.
Disguised transaction
A common practice in real estate relations is for a donation to be “dressed” as a voluntary partition (for example, when as a result of the partition one party acquires the property gratuitously). Outwardly, the transfer transaction is the voluntary partition, but the parties’ true intention is to make a donation. Then the donation is a disguised transaction which, if revealed as such, will be declared the intended valid transaction; accordingly, the voluntary partition will have the legal consequences of a donation and the risks described above.
Please note that this article is for informational purposes. Given the specifics of your case and for competent legal assistance, we recommend contacting the team at proverkanaimot.com.
GET IN TOUCH