In 2024, gifts reached record numbers in Spain, with an increase of nearly 15% compared to the previous year. Uncertainty about a possible harmonization of the Inheritance and Gift Tax (ISD) at the state level has led many to anticipate property transfers. This week, we analyse two lesser known but legally important types of gifts: the gift with retained rights and the gift with a prohibition to sell. Let’s explore them below.
Gift with retained rights: a gift with control.
One possibility under Spanish law is to give a gift while retaining certain rights over the asset in the future. Article 639 of the Spanish Civil Code states:
“The donor may reserve the right to dispose of some of the gifted assets, or an amount charged on them; but if he dies without having exercised this right, the assets or amount reserved shall belong to the donee.”
This type of giftcan be especially interesting for those who want to advance the transfer of their assets but keep some control or flexibility over them. Article 641 of the Civil Code also regulates a similar figure, which allows the donor to ‘recover’ the donated property (‘reversion’).
Gift with prohibition to sell. Limiting the donee’s ability to sell.
Another common modality is a gift with an express prohibition to sell or alienate the gifted asset. This can be registered in the Spanish Land Registry under the Spanish Mortgage Law. This figure is especially useful for those who want to ensure that the asset stays within the family or remains intact for a set period. It prevents children or other donees from freely disposing of the family’s wealth. Wasting it or selling it without control. In this way, the family legacy is protected and the estate’s value and purpose preserved.
Can the prohibition to sell be indefinite?.
No, the Civil Code forbids indefinite restrictions on property. Article 785 explicitly states:
“The provisions containing a perpetual prohibition to alienate, and even a temporary one beyond the limit set in article 781, shall have no effect (…).”
This means only temporary prohibitions within legal limits are valid — for example, not exceeding the second degree or established in favour of living persons. The goal is to protect the free circulation of assets and avoid indefinite immobilization.
For instance, if you gift a property to your child with a prohibition to sell until the second degree, neither your child nor their children (your grandchildren) can sell it. Only when these grandchildren pass away and an heir outside that degree inherits, will the prohibition end.
Limits under regional law in Catalonia and Navarra.
In regional customary law, the limits on prohibitions to alienate vary by region. For example, in Catalonia (Article 426.10 of the Catalan Civil Code), only one call is allowed, while in Navarra (Law 481 of its Compilation) up to four calls are authorized.
Conclusion.
If you are considering making a gift with retained rights, or a gift with a prohibition to sell, or if you already have done/received one, and have doubts about its validity, at White-Baos Lawyers can assist you. Don’t hesitate to contact us.
The information in this article is not legal advice but intended to provide information on related legal matters.
The information provided in this article does not constitute legal advice but is intended for general informational purposes only.
Carlos Baos (Lawyer)
White & Baos.
Tel: +34 966 426 185
E-mail: info@white-baos.com
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