OGH: Partial Gifts and Settlements

Apr 28, 2023 Benn-Ibler Rechtsanwälte

In the case at hand, the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) dealt with a property transfer between a landlord and the tenant of the building on the landlords’s property.

The first plaintiff is the owner of a parcel of land, the second plaintiff is her son. On their property, the single family house of a previous tenant had been taken over and enlarged by the defendant. In the lease amendment it was stipulated that at the end of the lease the landlord could either offer the superaedificate[1] building to a new tenant, tear it down, or transfer it into the first plaintiff’s ownership. In a subsequent action for eviction, the parties ‘settled’ as follows: The defendant was allowed to remain in the house until 31 May 2017 at the latest, waiving any stay of eviction. Thereafter, the building would pass into the ownership of the second plaintiff for free. The plaintiffs were now seeking the defendant’s consent to incorporation.

The court of first instance and the court of appeal dismissed the case altogether. The court of appeal ruled that this agreement was not a settlement but rather a partial gift, the waiver of rent being the quid pro quo, not the reservation of usufruct.

The OGH, however, ruled as follows:

In the present case, a wholly remunerative transaction must be assumed, i.e. a settlement. A settlement is the determination of disputed or doubtful rights by mutual concession. It also has a novative effect if the original commitments are replaced by an amendment. The first plaintiff accommodated the defendant to the effect that he was still allowed to use the house for his family. In return, the defendant accepted the termination of the existing contract and the transfer of the building. According to the OGH, the constellation of adding an additional party (in this case the second plaintiff) is a prime example of a settlement. Granting the continued use of the superaedificate is not comparable to a reservation of use by an owner, as the defendant was no longer entitled to use the building following expiry of the contract. The defendant was thus required to forbear incorporation.

OGH 8 Ob 141/22a (23.02.2023)

[1] The Austrian legal term for a building built on third-party property is Superädifikat, hereinafter superaedificate.