15.08.2022
The donation agreement should be simple, clear and without reservations.
A parent who wishes to transfer property to a child should not leave unresolved issues that may cause disputes between their children and lead them to court. Completion of the donation without any stipulations, except that the parent retains the right to use and reside on the property for their lifetime, is preferred.
Any reference in the donation agreement, especially in a vague way, to the alleged right of another child who is not a party to the agreement should be avoided. The acceptance of the donation must be unconditional, except for the above mentioned clause, in order to avoid unnecessary disputes. The content of the agreement should be simple, clear and unconditional. In fact, donations made between individuals who are not close relatives are valid when they are made, despite the lack of consideration.
The confidentiality of the contract in the donation contract between the donor and the beneficiary and any reference to a third party, even to another child, does not create a contractual relationship.
In a unanimous decision dated July 8, the Supreme Court considered the issue and intervened, overturning the first instance decision ordering the appellant to take all necessary steps to register or transfer the disputed land plots to the defendant’s name.
The trial court erroneously found that the applicant’s mother had donated the plots of land to his sister on the condition that she hand them over to him after five years. He also erroneously found that the mother’s wish, when transferring the property to his sister, who then transferred it to the plaintiff company, was that it should eventually be transferred to the defendant.
The Supreme Court cited the contents of the donation agreement, which did not substantiate these conclusions. There was a condition that the beneficiary (daughter) accept the donation and that after five years, when circumstances permit, she builds a bungalow house, shop or restaurant on the property and registers or passes it on to her brother.
The court stressed that the beneficiary never undertook the obligation to transfer the property donated to her brother. What she agreed to was the aforementioned position.
The Supreme Court in its decision noted that the Statement of Claim did not reflect the exact content of the donation agreement and was drawn up in a misleading form, which, unfortunately, neither the defense counsel nor the court of first instance were aware of. In paragraph 6 of the Statement of Claim, special attention was paid to the content of the donation agreement, which, however, was not supported by the donation agreement itself. There was no obligation to transfer property to the defendant, with or without buildings, or to build a house, shop or restaurant within 5 years of signing. The agreement stated that five years later, and when circumstances permit, it must happen.
Finally, the Supreme Court noted that the defendant was never a party to the contract. According to its content, any person who violates its terms is subject to damages to the other contracting party, and not to the defendant. In light of its finding, the Supreme Court held that it was not necessary to consider whether the confidentiality of contract doctrine should be taken into account here, and allowed the appeal.
George Coucunis is a lawyer practicing in Larnaca and founder of George Coucounis LLC, Advocates & Legal Consultants
