When notaries draft donations inter vivos, they are almost always gratuitous donations. But let's not forget that there are also onerous and remunerative donations. Onerous donations require certain acts, conditions, or work to be performed by the Donee in order for the donation to be valid. Suppose that the conditions are not fulfilled by the Donee, but the act of donation has been executed in proper form. The Donee can undo, or dissolve, the donation, but what about mortgages, leases or sales that have been done by the Donee in the meantime? La Civil Code article 1565 gives guidance in that regard.
Civil Code Article 1565
(1) As amended, article 1565 provides as follows:
In case of dissolution of a donation of an IMMOVABLE for the failure of the donee to fulfill conditions or perform charges, the property shall return to the donor free from all alienations, leases, or encumbrances created by the donee or his successors, subject to the law of registry. If the thing cannot be returned free from alienations, leases, or encumbrances, the donor may, nevertheless, accept it subject to the alienation, lease, or encumbrance, but the donee shall be accountable for any diminution in value. Otherwise, the donee shall restore the value of the thing donated, measured as of the time the action to dissolve is filed.
In case of dissolution of a donation of a MOVABLE for failure to fulfill conditions or perform charges, an alienation, lease, or encumbrance created by the donee or his successors is effective against the donor only when it is an onerous transaction made in good faith by the transferee, lessee, or creditor. (2) Article 1565, as amended, is based upon the old article 1568. Under the old article, if a donation of immovable property is dissolved due to the nonfulfillment of a condition, the donor is entitled to the return of the property unless the property has been alienated by the donee by onerous title. If the donee has alienated the immovable property by onerous title, the donor is not entitled to the return of the immovable property. Rather, the donee must pay to the donor the value that the immovable property had at the time of its donation. Under the new article 1565, as amended, the donor is entitled to the return of the immovable property even if the donee has alienated the immovable property by onerous title. The rights of the donor in this regard are subject to the law of registry. (4) Article 1565, as amended, also now addresses movable property. The old article 1568 does not include such a reference. Under article 1565, as amended, in the case of the dissolution of a donation of movable property due to the nonfulfillment of conditions, an alienation, lease or encumbrance created by the donee or his successors is effective against the donor if it is by an onerous transaction made in good faith by the transferee, lessee or creditor. This portion of article 1565, as amended, is analogous to the provisions of article 1559, as amended, regarding revocation for ingratitude.
We'll examine other nuances with donations in future newsletters.
Dan D. Schaneville
Statewide Notary Education, LLC
2842 Valcour Aime Ave.
Baton Rouge, LA 70820