When the property sold has become the property of the seller following a gift, a number of problems arise that can be resolved using the suspensive condition mechanism.
Intervention by the donor
When a person gives a property to their children, they often include an inalienability clause in the deed of gift, together witha contractual right of return.
The inalienability clause allows the donor to prohibit the donee from selling the property for a defined period. This inalienability often lasts for the lifetime of the donor.
This clause is often accompanied by a clause establishing a right of return in favour of the donor in the event that the donee dies without issue. Thus, if the donee dies before the donor without leaving any children, the property will automatically revert to the donor.
These two clauses are common in practice and prevent the donee from selling the property freely. With the first clause, the sale is purely prohibited. The penalty is cancellation of the sale. With the second clause, a sword of Damocles hangs over the sale. If the vendor/donee dies without issue while the donor is still alive, the property will revert to the donor, even if it has already been sold to a third party.
These two clauses therefore prevent the donee from selling the property with peace of mind. The solution is to get the donor involved in the deed of sale to waive the inalienability clause and the contractual right of return. Ideally, this should be done at the time of the preliminary sale agreement, and the donor's consent renewed in the deed of sale.
However, sometimes the preliminary sale agreement is signed very quickly, and it is not possible to involve the donor in time. In this case, a provisional sale agreement can be signed subject to the condition precedent that the donor's consent to the sale is obtained and that he or she intervenes to waive the inalienability and the right of return in the notarial deed of sale. In this case, you are strongly advised to contact the donor before signing the agreement to ensure that he has no objections to the sale.
Intervention by heirs with right to reserve
Some heirs benefit froma reserved portion of the estate, i.e. a minimum fraction of the property that must absolutely go to them when an inheritance is opened. This applies to the children of a deceased person. These preferential heirs are known as heirs reservataires.
When one of the heirs entitled to reserve rights is unable to obtain this minimum share of the estate because the deceased had given or bequeathed everything, that heir may bring an action in reduction to recover the full share of the estate. This action in reduction is then directed against the gifts and legacies that the deceased had made (from the most recent to the oldest) and the persons who benefited from them.
Thus, the person who received the reducible gift must compensate the other heirs in cash. However, if that person is insolvent and the donated property has been sold, the reservatory heirs may take action against the purchaser of the property.
So when a person has obtained a property by means of a gift, if the donor has not died or his estate has not yet been settled, there is a risk that the gift will be reduced when the donor's estate is opened. This risk exists even if the donee has sold the property to a third party. The donor's heirs may take action against the purchaser. It is therefore dangerous to acquire a property resulting from a gift.
To eliminate this risk of reduction and protect the purchaser, it is necessary to involve the donor in the sale, as well as all the donor's presumptive reserved heirs (for example, the donor's children) to give their consent to the sale (art 924-4 of the Civil Code). This consent will prevent the reserved heirs from taking any future reduction action against the buyer of the property.
Ideally, this consent should be obtained at the pre-contract stage. Sometimes, however, the agreement is signed quickly without the donor and the heirs with right to the property being involved. In this case, a provisional sale agreement may be signed subject to the condition precedent that the consent of the donor and the heirs with right of retention is obtained in the notarial deed of sale. In this case, you are strongly advised to make sure that these people do not have any objections to the sale before signing the agreement.