Real Estate Gift Agreement

A real estate gift agreement is a contract by which the owner of a property (the donor) undertakes to transfer that property to another person (the donee) without consideration, and the donee accepts the gift. Gift agreements are governed by Articles 479-498 of the Obligations Act (Zakon o obveznim odnosima). In practice it is often called a darovni ugovor (deed of gift) or colloquially ugovor o poklonu.

Under Article 482(1) of the Obligations Act (Zakon o obveznim odnosima), a real estate gift agreement must be concluded in writing. In addition, under Article 57 of the Land Registry Act (Zakon o zemljišnim knjigama), registration of title in the land register requires a contract with the donor’s signature certified by a notary public (solemnization). Without that certification the contract will not be sufficient for registration.

No. Concluding a real estate gift agreement is only the legal basis for acquiring ownership. To actually acquire ownership you must also obtain registration of title in the land register in the donee’s name. Without registration, the donee is not the legally recognised owner of the property.

If the property forms part of matrimonial property or of property acquired in a cohabiting union, the Family Act (Obiteljski zakon) requires the written consent of the spouse or life partner with the signature certified by a notary public. The same rules apply to life partners under the Same-Sex Life Partnership Act (Zakon o životnom partnerstvu osoba istog spola). Without the partner’s consent, the contract is voidable.

Under Article 59 of the Land Registry Act (Zakon o zemljišnim knjigama), the clausula intabulandi is an express statement by the donor as owner consenting to registration of title in favour of the donee. That statement may form part of the contract or be drawn up as a separate document. Without it, registration is not possible unless the donor takes part in the land registry proceedings.

Under Articles 484-487 of the Obligations Act (Zakon o obveznim odnosima), a gift agreement may contain a charge obliging the donee to perform or refrain from a specific act for the benefit of the donor, a third party or the public interest. If the donee fails to perform the charge even within an additional period, the donor may terminate the contract and demand the property back.

If the property is not actually handed over into the donee’s possession, the contract must be concluded in the form of a notarial deed or a solemnized document (Article 482 of the Obligations Act). Where there is no genuine handover and the contract is not in the prescribed form, the contract is null and void and produces no legal effect.

The right of habitation (Article 217 of the Ownership and Other Real Rights Act – Zakon o vlasništvu i drugim stvarnim pravima) is a personal servitude allowing the donor to use a residential building or part of it in accordance with its purpose while preserving its substance. The right is personal and ends on the donor’s death. It is entered in sheet C of the land register.

The right of habitation (Article 217 of the Ownership and Other Real Rights Act) relates to the residential part of the property. The right of use (Articles 212-216) is broader and relates to using the thing in accordance with its purpose. Usufruct (Articles 203-211) is the broadest – it allows use of the thing and collection of its fruits (for example rent). All three are personal servitudes, are non-transferable and end on the death of the holder.

The donee is liable for the gift tax under the Local Taxes Act (Zakon o lokalnim porezima) and the Real Estate Transfer Tax Act (Zakon o porezu na promet nekretnina). The donee is exempt if he or she is a first-degree relative of the donor – spouse, child, adopted child, parent or adoptive parent. The return is filed with the Porezna uprava (Croatian Tax Administration) within 30 days of notarisation of the contract.

Yes, a gift agreement may be terminated or revoked in certain cases laid down by the Obligations Act: impoverishment of the donor, ingratitude of the donee, failure to perform a charge, or the birth of a child to the donor after the gift. Revocation must be pursued before the court within the statutory time limits.

The forced share is the part of the estate which, under the Inheritance Act (Zakon o nasljeđivanju), belongs to the forced heirs (spouse, children and, in certain cases, parents). Gifts made in the last three years before the donor’s death may be challenged by forced heirs if their forced share is thereby prejudiced. That is why it is important for the contract to confirm that the gift does not prejudice any forced shares.