When ‘love and affection’ lead to an order for the transfer of immovable property

Specific performance is one of the most powerful and intrusive remedies of equity, as it goes beyond monetary compensation and compels the actual fulfilment of a contractual obligation.

Its significance is particularly pronounced in contracts concerning immovable property, where damages are rarely considered an adequate remedy.

The legal issue, however, becomes especially interesting where the agreement is not supported by financial consideration but is instead grounded in family relationships and a gratuitous gift. The prevailing perception treats such arrangements as informal or purely moral undertakings.

Cypriot law, however, and in particular the Contracts Law, Cap. 149, does not adopt this approach. On the contrary, it recognises that certain agreements without consideration may be valid and, under specific conditions, may even be subject to an order of specific performance.

The legal framework

Section 25(1)(a) of the Contracts Law, Cap.149 provides that an agreement without consideration is not void where it is made in writing and is based on love and affection between persons who have a close relationship.

This provision confers legal validity on agreements often regarded as mere family arrangements, provided that they bear the characteristics of a serious and binding contract.

In case C.A. 8445, the Supreme Court held that the relationship between siblings is sufficiently close to allow them to enter into a valid agreement under section 25(1)(a). The same does not apply, however, to first cousins, who are not considered to be in a sufficiently close relationship.

At the same time, section 76 of the law vests the court with discretionary power to order specific performance, particularly where the subject matter of the contract is immovable property and damages do not constitute an adequate remedy.

The combined application of these two provisions creates a distinct legal framework within which a gratuitous gift may become judicially enforceable.

Decision of the Nicosia District Court

These very issues were examined by the Nicosia District Court in a decision issued on January 23. The case concerned a written agreement without consideration relating to the transfer of an undivided share in immovable property, which was not implemented as agreed.

The plaintiffs sought a declaratory judgment against their mother, acting as administrator of their grandfather’s estate, and their aunt to the effect that a gratuitous agreement dated March10, 2022 was valid. They further sought an order for specific performance by way of the transfer of a 1/5 share from the share of defendant 1 (the grandfather) in five immovable properties, registered in his name, to each of the plaintiffs and defendant 2 (the aunt).

The court placed particular emphasis on the content of the agreement, the clarity of its terms, and the fact that it constituted a written commitment, as required by section 25(1)(a). It noted that, pursuant to its directions, the action had been served on the Land Registry.

Counsel appearing on behalf of the Land Registry confirmed that the properties were free from any encumbrances and that the District Land Registry Office would proceed with all necessary registrations following the issuance of a court judgment in the action, within the scope of its powers and competences.

The court’s reasoning

The court held that the absence of financial consideration did not invalidate the agreement, as it fell squarely within the ambit of section 25(1)(a). It further found that the requirements of section 76 for the grant of specific performance were satisfied, given that the subject matter of the contract concerned immovable property and that damages did not constitute an adequate remedy.

The acceptance of the claim by one defendant and the non-appearance of the other reinforced the conclusion that the agreement was capable of judicial enforcement.

The originality of the decision

The originality of the decision lies in its treatment of the gratuitous gift not as an “exception” or marginal case, but as a fully enforceable contract, provided that the statutory requirements are met. The court applied the relevant provisions in a practical and substantive manner, thereby enhancing legal certainty in family and property arrangements.

The decision of the Nicosia District Court of January 23 serves as a reminder that contract law is not confined to commercial transactions.

Love and affection, when embodied in a clear and written agreement, may acquire binding legal force and even lead to an order of specific performance.

At a time when private family arrangements concerning property are increasingly common, this decision offers valuable guidance and highlights an area of law that was until recently considered peripheral, but is now emerging as one of central importance.