"Rich gifts wax poor when givers prove unkind." William Shakespeare, Hamlet
Each of us, at various points in life, gives or receives a gift. In most cases these are small gifts or keepsakes with which we want to delight our friends and loved ones, thank them, or bring them positive emotions. It is no secret to anyone that receiving heartfelt gifts from those close to us is a very pleasant, moving experience. It is one of the ways caring people show each other attention, which leads the recipient of a gift to think warmly of the giver and remember them fondly. Expensive gifts are usually given to family members and relatives, and in a number of cases such gifts also take the form of money for major purchases, including the purchase of real estate. Gifted property passes from one owner to another. The new owner becomes the full owner of the property and, from that moment on, may possess, use, and dispose of it at their own discretion.
It must be understood that, from a legal standpoint, a gift is a transaction with a number of characteristic features of its own. A gift is one type of civil-law transaction concluded between parties, based on certain agreements between them. In this case, one party — the donor — expresses the will and wish to give away property belonging to them, and the other party — the donee — accepts it as a gift (§ 516 of the German Civil Code, Bürgerliches Gesetzbuch, BGB). Either way, the transaction is impossible without the will of both parties. Virtually anything can be the subject of a gift: real property — an apartment, a house, a plot of land; or movable property — money, a car, a motorcycle, or any other property. For the transaction to be valid, it must be properly executed in the form required by law. In particular, gift agreements for real property in Germany must, without exception, be notarized, and title must pass through an entry in the land register. The transfer of title to real property from one person to another is confirmed by a land register extract showing the corresponding entry.
In addition, entering into a gift agreement requires the following mandatory conditions: full legal capacity of the persons involved in the transaction; their understanding of their own actions and the consequences of those actions; and the absence of physical or psychological pressure.
If even one of the factors listed above is absent in a person taking part in the transaction, that transaction may at any moment be challenged and declared void by a court.
As we all know, in the overwhelming majority of cases, what someone has given as a gift becomes the property of the donee and cannot be reclaimed by the donor — but every rule has its not-always-obvious exceptions. We would like to discuss such an exception in this article, using an example from our law firm's practice.
An elderly couple came to our law firm for a consultation — let's call them Ruslan and Valentina. Their problem was quite unusual and can be described as follows. Our clients told us they had become parents early in life, and later grandparents. Their first granddaughter, Olga (name changed), was clever and pretty; even as a child she delighted the whole family with her achievements at school and in her dance studio. Ruslan and Valentina loved spending time with their granddaughter — they often took her in for weekends and school holidays, spent time with her, and rarely said no to any entertainment available to her. Time passed, the girl grew up, and, almost without anyone noticing, she became a teenager: she got her own friends, her own circle, her own trips with friends. Even so, the young woman remained attentive and affectionate toward her parents and her grandparents. Although she no longer spent as much time with them as she had as a child, Olga never forgot to call her relatives regularly and to visit them often.
Olga met, or so it seemed to her at the time, the man of her dreams in her third year at university. The young woman's chosen one, Oleg (name changed), was a few years older, well educated, and had already started his own business, opening two small cafés and a beauty salon. Despite his fairly young age, Oleg already had experience with various relationships. Olga seemed to him the perfect candidate for the role of wife; he knew how to court a woman elegantly, to give pleasant gifts and surprises, and he succeeded in building trusting relationships with all of her relatives. The young couple dated and got on wonderfully for about a year, until the day Oleg made a romantic proposal of marriage. It seemed everything had long been heading in that direction, and nothing stood in the way of a lavish, joyful wedding — save for one significant "but." The young couple did not yet have a place of their own. Oleg could have taken out a bank loan and bought a small apartment of his own, but the couple wanted to start a family soon, and moving from one apartment to another struck them as impractical. The bride and groom's cherished dream was a spacious two-story house with a small lawn and garden — but where were they to find the money to buy it? At this point, the grandparents, who had always spoiled their granddaughter, stepped in. Naturally, they were happy for their granddaughter and wished her nothing but the best. What is more, they were very fond of Oleg and gladly welcomed the young man into their close-knit family. Ruslan and Valentina had themselves moved between many apartments over the years — they understood perfectly well how important it was for a young couple to live in a home of their own from the very start of family life. The elderly couple owned a villa in Italy, where the whole family occasionally vacationed. After several rounds of family discussions, a decisive decision was made to sell the villa and give the proceeds to their granddaughter and her future husband, so that they could buy the house they liked and start building a cozy family nest of their own there. And that is exactly what was done — the villa in Italy was sold, the proceeds were put at Olga and Oleg's disposal, and they fairly quickly found a house that suited what both of them wanted and began fitting it out for their future life together. It should be noted that, from a legal standpoint, when buying this property the young couple decided to register it as co-ownership in equal shares. At the time, Olga did not even consider the possible consequences of this somewhat reckless decision — she trusted her chosen one, her future husband, completely and without reservation.
As planned, Oleg and Olga had a lavish, joyful wedding, went on a luxurious honeymoon, and, on returning, moved into their new, bright house. Unfortunately, neither of them expected or could have foreseen that living together and sharing everyday life is nothing like a honeymoon and demands constant effort from both sides. The young couple managed to live together for about a year, during which arguments and quarrels alternated with periods of truce and relative calm. The final straw that exhausted Olga's patience was her husband's gambling habit. Concluding that she could not come to terms with her husband's behavior, or with his total indifference alternating with harsh confrontations, the young woman decided to separate and subsequently to divorce. A serious problem arose quite unexpectedly when Oleg, having moved out of the house where he and Olga had lived together for a year, demanded his half of the money spent on the house. In his view, since the money for the property had been gifted to him too, he was now entitled to claim his own share of it. Valentina and Ruslan, utterly bewildered, turned to our law firm for advice and help.
A lawyer specializing in civil-law matters got to work without delay. On the one hand, it did indeed appear that the money had been received as a gift and was not to be returned to the donors. On the other hand, the situation was not entirely clear-cut. Our clients had given the money to their granddaughter and her husband for a specific purpose — to buy a house for their life together. This generous gift had come with an implicit condition: that the house would serve a long life together for the young married couple. The house had indeed been bought, but the couple's life together in it lasted only a year. On this basis, it could be concluded that the gift had not been used for its intended purpose — that is, not in accordance with the donors' will. Under civil-law principles, using a gift in a way that departs from the purpose for which it was given is grounds for the donor to reclaim the gift. All of these arguments, grounded in statutory provisions and case law, were set out in a letter our lawyer drafted for our clients' granddaughter's former husband. He was offered the chance to keep only a small portion of the money spent on buying the house, in view of the fact that the couple had, after all, lived together for a year. Should he disagree with the arguments presented and decide to take the matter to court, our lawyer would, of course, represent our clients' interests in court through to a successful conclusion of the case.
From Our Firm's Practice
It must be understood that, from a legal standpoint, a gift is a transaction with a number of characteristic features of its own.
We wish all our readers wisdom in choosing life partners and in making major joint purchases, especially where transactions exceed the average family budget. Unfortunately, absolutely no one is immune to foolish mistakes, particularly in one's youth. If a similar problem has suddenly touched your family and you need advice and legal assistance, we look forward to welcoming you at our law firm.
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