It is important to know the essential differences between a gift agreement and a purchase agreement to properly assess which is more suitable for you and to avoid the risks of not canceling the transaction.
A gift agreement is a written agreement with which the giver donates, and the gift recipient accepts some property for free of charge. The essential difference between a gift agreement and a purchase agreement is that the gift is free of charge (no purchase fee).
In case the immovable property is donated, the value of the real estate must be indicated in the gift agreement to be able to calculate the state fee for re-registration of property rights to the new owner (the gift receiver). In practice, the lowest cadastral value of the property is most often indicated. The state fee in the case of a gift contract is 3% of the value of the real estate. In case the gift agreement is concluded between family members (children, spouses, parents, brothers, sisters, grandchildren, grandchildren, or grandparents) – 0.5% of the real estate value.
In practice, contractors choose to enter into a gift contract instead of a purchase agreement, as this avoids offering pre-emption rights to pre-emptioners (eg co-owners) or the possibility of evading personal tax. However, there are several legal risks that should be assessed on a case-by-case basis in order to avoid them.
The main legal risks to consider when signing a gift agreement:
- One of the contracting parties brings an action in court seeking recognition of the gift agreement as a purchase agreement with a claim for payment of the purchase price.
- The giver may revoke the gift agreement during his lifetime (proving in court gross ingratitude of the gifted person).
- The heirs of the giver can dispute the gift in court after the death of the giver or redeem their irrevocable part of real estate.
- It is important to provide in the gift agreement with a prohibition to alienate, gift, pledge and encumber the real estate without the written consent of the giver, as well as the right of lifetime use in favor of the giver, if the giver still lives in the real estate.
- The gift agreement does not have to be long and complicated, but it must set out the main and essential components that distinguish each of the types of gift. In practice, the parties often want to make a conditional gift, such as taking care of a relative and / or the property itself, but this is not stipulated in the contract due to ignorance.
We will provide you with legal support for the preparation of the gift agreement, so that your gift will run smoothly.
|Type of contract
|Blank sample of Gift agreement
|Completed Gift agreement for the specific client's transaction