The real estate donation contract is one of the most common ways of transferring property in Ukraine. However, the external simplicity of this process hides numerous nuances that can have serious legal consequences for both parties. Legal ignorance or ignoring certain formalities can turn donations into a source of conflicts and even property loss.
Lawyers from the Repeshko and Partners Bar Association share expert comments on the key aspects of donating real estate, explain important legal details, and analyze typical mistakes that should be avoided. These clarifications will be useful for those who are planning to give or receive real estate as a gift, as every detail can be important for your legal security.
The contract of donation of immovable property is probably one of the simplest contracts considered by ordinary citizens, and they are often mistaken. Yes, everything looks simple from the outside – I took it and gave it as a gift! But behind this simple action there are many pitfalls. Even depending on who gave a gift to whom, there are different legal consequences not only for the recipient, but also sometimes for other persons. So, let’s start from the beginning.
Sometimes we had to hear the following stories more than once – for the wedding, the parents of the groom or the bride gave the newlyweds an apartment. This was announced to all present at the banquet and even the keys to the precious gift were solemnly handed over. But when, five years later, the couple came to a divorce and one of the spouses demanded to share the apartment somehow gifted to both of them, it turned out that although they lived in the “gifted” apartment all these years, they made repairs there with joint funds, bought furniture and appliances , the apartment legally never passed from the same parents who “gifted” it to both newlyweds. What’s more, none of the spouses can claim it, even the one whose parents. It has always been and remains the exclusive property of parents. From this example, the following rules emerge, which are fixed at the legislative level:
- In accordance with the second part of Article 719 of the Civil Code of Ukraine, the contract of donation of immovable property is concluded in writing and is subject to notarization. The legislation also provides for mandatory state registration of ownership of real estate purchased under the contract in the State Register of Real Property Rights. Since the contract was not drawn up according to these rules, it is pointless to prove the fact of donation in court.
- Donated property is the personal private property of the person to whom it was donated. Such property is not considered jointly owned by the spouses and is never divided upon divorce. In the example given at the beginning of the article, even if the parents gave an apartment to one of the spouses through a notary, the other would still have no right to anything.
A receipt stating that a person gives or undertakes to give another person an apartment, part of a house, etc., also has no legal force, it can only warm the soul, but not for long.
It is necessary to know that a donation contract is an agreement of the parties, according to which one party (the donor) transfers or undertakes to transfer in the future to the second party (the recipient) property (gift) free of charge in accordance with the Civil Code of Ukraine (hereinafter referred to as the Civil Code of Ukraine).
It is important that the donation contract is always free of charge! If the grandmother promises to draw up a contract for the gift of an apartment for a neighbor, and she will take care of it in return, then you need to refuse immediately! For this case, there is a suitable contract – lifetime maintenance, and the registration of the gift itself may be a reason to terminate the contract even after a couple of years of care.
The donor (one who donates) does not have the right to demand countermeasures from the recipient for his gift. He does not receive any material benefit. A contract that establishes the donee’s obligation to perform any property or non-property action for the benefit of the donor is not a donation contract (part two of Article 717 of the Civil Code of Ukraine).
Therefore, the donation contract is drawn up exclusively at a notary. At the same time, it does not matter whether it is a public notary or a private one, the difference is that it will cost more at a private notary, but it can be done quickly, and public notaries are usually busier, so you may have to wait for more than a week. It is important to remember only that the notary must carry out his activities:
- by location of real estate (apartment, house, land plot, etc.);
- according to the registered place of residence of an individual of one of the parties to the contract (donor or recipient).
This agreement can be concluded both personally by the parties and through representatives on the basis of a power of attorney drawn up both by a notary and by a relevant consular institution or a foreign notary with subsequent apostillation in the event that the party cannot arrive on the territory of Ukraine. The only important caveat is that the power of attorney should be written specifically for the conclusion of the gift agreement, and not contain general phrases. Also, the power of attorney on behalf of the donor must clearly state the surname, first name, and patronymic of the recipient.
It is worth noting that the agreement on the donation of joint joint property of the spouses concluded without the consent of the other spouse is invalid. Thus, if the donated property is the joint property of the spouses, depending on how it is designed, either an application on behalf of the second spouse or a power of attorney to conclude the donation agreement is necessary.
If the donor is the owner of only a part of the house or apartment, which is jointly owned by several people, then the consent of the other co-owners is not required for the signing of the contract of donation of one share for the certification of such a deed.
There is one more important nuance. According to the second part of Article 177 of the Family Code (SC) of Ukraine, parents (adoptive parents) or the guardian of a minor child do not have the right, without the permission of the guardianship authority, to commit acts in relation to the object of residential real estate and/or the land plot on which such an object is located , the owner or user of which is a minor child. Article 720 of the Civil Code of Ukraine establishes that parents (adoptive parents), guardians do not have the right to donate the property of children, wards. Thus, it is not possible to gift property belonging to a minor child (under 18).
Regarding the execution of a donation contract for a minor child under 18 years of age. According to the rules of Article 6 of the Civil Code, a minor child has limited civil capacity and cannot conclude a contract. Parents conclude and sign the contract on behalf of the child, and if they are not present, an employee of the guardianship authority is appointed. If we are talking about a minor, then he is allowed to be a party to the contract, but under certain conditions.
At the same time, it is possible to issue a donation of a share of an apartment to a minor, which is carried out according to the same rules as the donation of the entire object.
When concluding an apartment gift agreement to a minor child, the notary must check the presence of the consent of the parents or one of them. The consent of only one of them is allowed if, in relation to the second parent:
- documented death;
- there has been a deprivation of parental rights or the right of guardianship;
- the entry in the Birth Registration Book was made according to the surname and citizenship of the mother, and the name and patronymic were recorded according to her instructions.
But it is necessary to remember another feature – deeds on behalf of a minor can be certified only if they are done with the consent of the parents (adoptive parents) or guardian and with the permission of the body of guardianship and guardianship.
These rules correspond to part 3 of Art. 17 of the Law of Ukraine “On Childhood Protection”. Parents or persons replacing them do not have the right, without the permission of guardianship and guardianship authorities granted in accordance with the law, to enter into contracts that are subject to notarization and/or state registration, to renounce property rights due to the child, to divide, exchange, alienate housing , issue written commitments.
Thus, an important feature of apartment donation contracts for the benefit of a minor child is the need to obtain the consent of the parents and the permission of the guardianship authority to make the donation.
And now about the main thing – sometimes giving, and sometimes not giving at all. There are cases when, with the help of this contract, they try to avoid the sharp corners of legal relations. Banal examples: during married life, the husband saved money for the purchase of a house, but it was clear from the family budget. So that the wife does not have the right to this property in the future, the husband’s mother buys the house and gives it to her son accordingly.
In this way, it is impossible to prove that it was the husband who bought the house and to divide it during the divorce. Or a completely different example – there are several co-owners in the house and one of them decided to sell his share. By law, the co-owners of the house have a preferential right to purchase a part for the same price and under the same conditions. But at one time the seller was so burned by the other co-owners that he categorically does not want to sell his share to them. In order to circumvent the norm of preferential purchase by other co-owners, the agreement is drawn up as a gift. Of course, there are some nuances here, but if taken as a whole, it is almost impossible to prove otherwise.
Also, unlike other donation agreements, there is one very unpleasant point that not everyone and not always remembers – taxation. As they say, two things in life cannot be avoided – death and taxes. Therefore, according to the norms of the Tax Code of Ukraine (hereinafter ‒ PC), if the subject of the contract is real estate, then in matters of payment of tax on the income of individuals, rules similar to those applicable to inheritance taxation apply. This means that if the gift was made to a relative of the 1st or 2nd degree of consanguinity, then it is not necessary (not necessary) to pay the tax.
According to p. 14.1.263 PC family members of the first degree include parents, husband or wife, children of such a person, including adopted children. Relatives of the second degree include brothers and sisters, maternal and paternal grandparents, grandchildren. So, if a mother or father gives an apartment to a child, then according to this gift agreement, income tax is not required to be paid, as in the case when a brother gives a sister. Disabled persons of the 1st group, orphans, children deprived of parental care or a disabled child are also exempted from paying this tax.
In all other cases, the personal income tax is 5%. In this case, the object of taxation is the value of the gift. To determine the value of the gift, a certified appraiser prepares a real estate appraisal report. Since it is done for taxation purposes, in practice, the value of real estate that will be indicated in the report will be at least 10% higher than the average market value, or even 20%.
As for the military levy, it is established according to p. 16-1 of subsection 10 “Other transitional provisions” PC. At the same time, it is paid according to the same rules as personal income tax. Gifts subject to military levy are taxed at 5% (previously 1.5%, but recent tax hike legislation has changed this). If the gift is not subject to personal income tax according to the rules specified above, then there is no need to pay the military duty.
As for the nursery rhyme – “gifts are not gifts”, it does not work in this case. According to Article 727 of the Civil Code of Ukraine: The donor has the right to demand the termination of the contract of donation of immovable property or other particularly valuable property, if:
- the donee intentionally committed a criminal offense against the life, health, property of the donor, his parents, wife (husband) or children. If the donee committed intentional murder of the donor, the heirs of the donor have the right to demand the termination of the donation contract.
- the recipient creates a threat of irreversible loss of the gift, which has a great non-property value for the donor
The donor has the right to demand termination of the donation contract, if the gift is preserved at the time of making the demand. In case of termination of the gift contract, the recipient is obliged to return the gift in kind.
A one-year statute of limitations applies to requests for termination of the donation agreement. It is during this period that the donor can ask the court to terminate the agreement. However, the three-year statute of limitations is preserved for the invalidation of the agreement (shared property was donated without the consent of the second spouse, the donor took psychotropic or narcotic drugs due to illness, etc.), a sham transaction (where the donation covered lifelong maintenance or sale), transfer buyer’s rights and some other grounds.
But the most important thing should be remembered by a person who donates his real estate – from the moment the agreement is signed by a notary and the data is entered in the real estate register, the right of ownership, and therefore full disposal of the property, passes to the recipient. and the donor becomes nobody in relation to the apartment or house. Moreover, as earlier a person who was registered (registered) in immovable property could be deregistered only by court order, now it is enough for the new owner to submit documents to the Center for the provision of administrative services stating that he is the new owner and asking for a preliminary deregistration from registration. Thus, having given an apartment, it is possible to become homeless at the same time, without even thinking about such a development. Therefore, give, but only what is superfluous, to whom you completely trust, and when there is no other option.
