Austrian OGH on Asset Transfers by Guardianship Courts

Apr 25, 2025 Benn-Ibler Rechtsanwälte

A legal transaction may only be approved by the guardianship court if the conclusion of the legal transaction is to the benefit of the person under guardianship as well as in their best interest. This is not the case if possible reductions in the person’s assets cannot be ruled out.

In the case at hand, two minors, aged twelve and ten, were given a house with rental apartments in Vienna, Austria, by their aunt. The donor reserved the right of usufruct. In addition, the children granted the aunt a prohibition of encumbrance and sale. It was agreed in the contract that the donour would bear the costs and expenses associated with the property and her rights as the holder of the usufruct.

The minors applied to the guardianship court that oversees the legal affairs of minors for approval of the donation agreement. The purpose of the gift had been to increase the minors’ assets. All costs, taxes, and expenses would be borne by the father, so that the minors would not be burdened with any costs related to ownership of the property.

The court of first instance dismissed the application on the grounds that the gift agreement was not exclusively to the benefit of the minors. This decision was upheld by the court of appeal.

The matter was then referred to the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) which ruled as follows:

The lower courts had based their decision on the fact that the children cannot sell, encumber, or use the property once they have reached the age of majority and their father would no longer liable for it. However, it cannot be ruled out that they might have to bear potential costs, even though the children are not self-sufficient.

In principle, the cost of maintaining the property must be borne by the beneficiary of the usufruct. However, beneficiaries are only under financial obligation up to the amount received; the owner must contribute the shortfall. If the owners have public law obligations (e.g. to remedy building defects), they are under obligation to bear any such costs.

The OGH confirmed that the gift agreement was not in the best interest of the children due to the fact that the children might have to bear potential costs.

OGH 4 Ob 5/25a (25 February 2025)