About the presence of “malicious intent” in the sale of real estate to relatives

On 11.09.19, the Supreme Court of Ukraine considered case No. 554/10202/13-c, in which the heir – the son from the first marriage of the deceased homeowner tried to defend his father’s apartment, sold by his second wife during her husband’s life and by his power of attorney to her own son. He insisted that there was a malicious arrangement!

Background

A citizen (the son of the owner of the sold apartment from his first marriage) filed a lawsuit with a citizen (the actual wife of the plaintiff’s deceased father). The power of attorney issued to the deceased wife for the disposal of the property was contested. She, using this right, sold the apartment to her own son.

The plaintiff demanded that the power of attorney to represent interests be declared invalid and that the contract for the sale and purchase of an apartment sold under this power of attorney be declared invalid.

According to the plaintiff, the father, due to illness, could not realize his actions when signing the power of attorney. The plaintiff insisted in court on the existence of a malicious agreement between the parties to the transaction.

First Instance Court and Appeal …

Conducted a legal analysis of the sales contract and declared it invalid. The plaintiff was rejected as regards the cancellation of the power of attorney, since there was in case the conclusion of a forensic psychiatric examination, according to which the owner of the apartment at the time of drawing up the power of attorney acted consciously.

Satisfying the requirement to declare the sale and purchase invalid, the courts proceeded from the fact that the parties to the transaction did not inform the notary that the money for the apartment would not be transferred. In the contract itself, it was indicated that the funds had already been transferred before it was signed, which only confirms the fact of full payment for housing.

The Supreme Court sorted out the situation

It was established that the apartment really belonged to the deceased citizen, and the plaintiff was indeed his son from his first marriage. The fact of issuing a power of attorney allowing the owner’s wife to alienate the property was also confirmed …

The Supreme Court of Ukraine did not accept the fact that there was a malicious agreement, explaining that the conclusion of a sale and purchase agreement by the owner’s representative with the buyer, who is his close relative, cannot in any way confirm “malicious intent”.

“Malicious agreement” in the context of the application of Art. 232 CCU is “deciphered” in the current conclusion of the Supreme Court of Ukraine in case No. 522/15095/15-c of 29.08.18, according to which:

1. It takes place if, in an incident, the substitution of the will of the principal for the will of the representative is obvious, contrary to the will of the principal.
2. It is important that the representative and the other party to the transaction are aware that their actions are contrary to the will of the principal.