State attorneys filed the claim on Wednesday for the Pazo de Meiras estate in the northwestern region of Galicia with a court in the nearby city of A Coruna, the justice ministry said in a statement.
The lawsuit argues the sale in 1941 of the historic property, which was used by Franco as a summer residence, to the dictator was “fraudulent” and it should become public property.
After Franco's death in 1975, his heirs continued to use the property, which currently belongs to his grandchildren.
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The mansion, which was built between 1893 and 1907, was declared a monument of cultural interest by Galicia's regional parliament last year, meaning it should be open to the public.
But Franco's descendants have disputed the decision claiming it is their private property.
The lawsuit comes as Spain's Socialist government has been locked in a legal battle with Franco's heirs over the past year over its plans to exhume Franco's remains from a vast state mausoleum outside Madrid and move them to a more discreet location.
The exhumation had been scheduled to take place last month but it was suspended at the last minute by Spain's Supreme Court while it considers appeals from Franco's family.
Franco came to power after Spain's 1936-39 civil war, which was triggered by his rebellion against an elected Republican government.