Contract On Lifetime Support in Serbian law
Having in mind its importance as well as the fact that it is concluded almost every day, in the following text we will explain the specifics of the Contract of support for a lifetime (the “Contract”).
The Law on Inheritance of the Republic of Serbia (“Official Gazette of the RS“, No. 46/95, 101/2003 and 6/2015, the “Law“) prescribes that the Contract obliges the recipient of support to transfer the property of certain things or some other rights to the provider of support and the provider of support undertakes to support him, as compensation, and to take care of him for the rest of his life and to bury him after his death.
The contracting parties are designated as the recipient of support and the provider of support.
The recipient of support is usually an elderly person, with low income and poor health, who is not able to take care of himself.
The provider of support is usually a younger natural person who undertakes to take care of the recipient of support, support him for the rest of his life and bury him after his death.
The Contract is usually concluded between two people, but it is possible to have more than one person on one side. This is the case when spouses appear on the side of the recipients of support. The Contract may also be concluded in favor of a third party. In that case, the provider of support acquires ownership of the objects of the Contract at the time of death of his interlocutor if the Contract does not stipulate that the ownership passes at the time of death of a third party, while the maintenance obligation lasts until the death of the third party.
The Contract must be concluded in writing and in the form of a notarized (solemnized) document.
When confirming the Contract, the notary public is obliged to warn the contracting parties that the property that is the subject of the Contract does not enter into the legacy of the recipient and that it cannot settle his necessary heirs, which is noted in the confirmation clause, otherwise, the Contract will be invalid.
SUBJECT OF THE RECIPIENT OF SUPPORT OBLIGATION
By the Law, the subject of the obligation of the recipient of support can only be things or rights that exist at the time of concluding the Contract.
In practice, the subject of the Contract is most often the right of ownership of the real estate, however, the contracting parties may provide that the provider of maintenance after the death of the recipient will pass another property right (for example cash, share in the company, the recipient’s claim against a third party, etc.)
SUBJECT OF THE PROVIDER OF SUPPORT OBLIGATION
The obligation of the provider of support consists in the maintenance of the recipient of support, and the Law leaves it to the contracting parties themselves to determine the content of the obligation of the provider of support.
The obligation of the provider of support does not necessarily consist of material benefits and his obligation can be reduced to the care of the recipient of support (helping with personal hygiene, taking medication, etc.)
In the case that the contracting parties fail to specify the content of the provider of support obligation, a dispositive legal rule applies, according to which, unless otherwise agreed, the maintenance obligation includes the provision of housing, food, clothing and footwear, appropriate care for illness and old age, treatment and benefit for everyday common needs.
The Contract can be terminated for several reasons, and the Law specifically singled out termination due to disturbed relations and termination due to changed circumstances.
Termination of the Contract due to disturbed relations
Disturbed relations imply a situation in which the mutual relations of the contracting parties have been disrupted for any reason that they have become so unbearable and then each of them can request the court to terminate the contract, where in case of termination the recipient will be obliged to compensate services, and if the termination was due to the fault of one party, the other party will be entitled to the right compensation.
Termination of the Contract due to changed circumstances
As for the changed circumstances, for the Contract to be terminated, the circumstances must change after the conclusion of the Contract, so much so that the fulfilment of the Contract becomes significantly more difficult, e.g. relocation of the provider of support abroad. In that case, the court will, at the request of either party, terminate the Contract or re-regulate their mutual relations. The court may then convert the recipient’s right to maintenance into a life annuity (giving a predetermined amount every month for the rest of the recipient’s life, without any other obligations) provided that both parties agree.
In addition to the general rules of contract law on the absolute and relative nullity of contracts, the Law provides for special cases that apply only to this Contract.
The Contract will be absolutely void when the provider of support is a natural or legal person who takes care of the recipient (medical staff, hospitals, various agencies, etc.) within his profession or activity unless the consent of the competent guardianship authority has been obtained.
The Law prescribes two reasons for relative nullity:
In the first place, the absence of an aleatory element is the reason for the relative nothingness of the Contact and the Law stipulates that the court may annul the Contract if due to illness or age of the recipient of support he did not represent uncertainty for the provider of support.
In determining whether the Contract was uncertain for the court provider, they do not require his ability to overlook the exact moment of the recipient of support death, so the fact that the recipient of support died shortly after the conclusion of the Contract will not lead to its annulment if his health condition at the time of the Contract conclusion was stable.
The Contract will not be null and void if the provider of support supported the recipient during his lifetime, so on the eve of the death of the recipient, they concluded the Contract to legalize that factual relationship.
Only legal heirs have the right to request the annulment of the Contract, within a subjective period of one year from learning of the existence of the Contract or an objective period of 3 years from the death of the recipient of support.
The subjective deadline runs within the objective deadline.
Another problem is simulated Contracts, which refer to the situation when the Contract was concluded to conceal some other concluded contract. This usually happens to circumvent the rights of the necessary heirs. The necessary heirs must file a lawsuit for the annulment of the simulated contract, but in practice, there are problems in proving the simulation.