Parents allowed their son and daughter-in-law to build their house on half of the land owned by the parents. The parties signed a gift agreement with a commitment stating that if the couple seeks to sell the property during the lifetime of the parents (or either of them), the gift of the land will be revoked and the parents will have a right of first refusal in purchasing the house. The lease rights in the property were recorded in the couple's name. After the couple decided to divorce, the parents sought to exercise their right to cancel the gift of the land and buy the house.
The Court accepted the demand to cancel the gift. A real estate gift transaction, which is a transfer of rights in a real estate asset without consideration, usually between relatives, is also deemed a real estate transaction in every sense and requires proper recording in the land registry. A contract can be conditioned on a subsequent condition which, if met, the contract will be terminated. That condition is a future event to the day the contract is concluded, which at the time the contract is concluded, the parties do not know for sure whether it will occur. Here, when the parents made the gift, they stipulated a condition subsequent that states that if the couple wishes to sell the house, the gift will be canceled and the parents will receive a right of first refusal to purchase the house. Although this right was not recorded, it was agreed upon between the parties and therefore, the parents are entitled to purchase the rights of the spouses in the property against payment of the value of the built house only.