In today’s article we are going to address the breach of contract by the buyer, in the purchase and sale of a property in Spain. And how the vendor must proceed to resolve or terminate the contract. Since there is a speciality in the case of the sale of real estate in Spain, which is essential to know. You can find out more information about buying and selling in Spain on our Website. In particular in the sections of real estate law and legal claims.
The possibility of terminating or cancelling a contract.
In the event of non-performance of the obligations of the contract, Spanish law contemplates the possibility of the contract being resolved. In other words, it can be terminated. The aggrieved party may choose between:
1.- Request the contract to be fulfilled (and to be compensated for damages and interest), or
2. To have the contract resolved or terminated, and also to claim the corresponding compensation.
This faculty to terminate contracts is contained in Article 1124 of the Spanish Civil Code, which states:
“The faculty to terminate obligations is implicit in the reciprocal ones, in the event that one of the parties does not comply with what is his responsibility.
The aggrieved party may choose between demanding the fulfilment or termination of the obligation, with damages and interest in both cases. He may also request termination, even after having opted for the fulfilment, when this proves impossible…”.
The speciality of purchases and sales of real estate property.
Although according to the aforementioned Article 1124, non-fulfilment may lead the aggrieved party to terminate or resolve the contract. The Spanish Civil Code sets out a special requirement in Article 1504, when the sale of a real estate property is involved. And when the non-performance is the failure to pay the price within the agreed time. This article reads as follows:
“In the sale of real estate property, even when it has been stipulated that failure to pay the price within the agreed time will results in the right to terminate the contract, the buyer will be able to pay even after the expiry of the term, and until he has been summoned by court or by notarial act. However, once the notice has been served, the judge may not grant a new term.”
Therefore, in order for the vendor to be able to terminate the contract due to non-payment by the purchaser, this article requires that the vendor demands payment through a judge or by notarial request. Until such injunction is issued, the buyer may pay, even if it is after the deadline set in the contract.
Practical effects on the sale and purchase of real estate in Spain. What to do when the buyer does not pay.
In accordance with the above, when we are dealing with the sale and purchase of a property in Spain (house, apartment, etc.), we must bear in mind that:
1.- The Civil Code will apply, even if the contract states that the non-payment of the price by the buyer; will result in the termination of the contract, without further requirements.
2.- Therefore, we will have to request to the buyer via notary or court, to be able to terminate the contract.
3.- Failure to resolve or terminate the contract could cause serious problems for the vendor. As it could be understood he is still bound by the contract. Or that the termination is not correct or valid and, therefore, he is still obliged to sell. If this is not done correctly, the vendor could be bound by the contract until it is correctly terminated, and he would not be able to sell to another person.
If you have sold your property and there is a breach of contract by the buyer, who does not pay the price. Or if you are a buyer and cannot pay the price. You should get expert legal advice. You must settle and terminate the contract correctly, so that you do not have further problems. Contact us if you need expert legal advice.
The information provided in this article is not intended to be legal advice, it merely conveys information relating to legal issues.
Carlos Baos (Lawyer)
White & Baos.
Tel: +34 966 426 185
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