How to buy a property without all the money or mortgage? The Resolutive Condition in the Spanish law.

White and Baos Lawyers receive inquiries from buyers and sellers where, although they agree on the conditions of the sale, the buyer cannot immediately pay the full price and has problems obtaining financing – usually a mortgage loan that allows the purchase in the usual way.

And if the buyer needs to defer part of the payment because he does not have all the money, and the seller needs guarantees to be able to recover the property should the full price agreed is not finally paid, a solution could be the resolutive condition.

This guarantees the full payment with a resolutive or termination condition; stating that the buyer defer part of the price, and in case of not paying in full as agreed, the sale will be resolved and terminated, and the seller will be able to recover the property sold.

The main function of the resolutive condition is to ensure, on the one hand, that the buyer can have possession and use of the property even if he has not paid the full price. And on the other hand, that the seller can recover the property if the buyer does not fulfill with the agreed payment.

In the Spanish civil code, the resolutive condition in the case of the sale of real estate property includes this condition according to article 1504 of the Civil Code.

Therefore, it is advisable in case of not paying the entire price at the signature of the sale before a notary, that the outstanding amount is guaranteed by a resolutive condition, which if it is properly set up, will be recorded in the Land Registry as a real guarantee of payment linked to the property – similar to a mortgage – so if the buyer does not comply with the agreement, ownership of the property itself will return to the seller.

It is very convenient to indicate how these deferred payments will be made, the dates, and where possible, the complete details of the bank account in which payments must be paid to.

It is also possible to word the resolutive condition in such a way that once the deferred money is paid and after a sufficient period, it is automatically canceled, without having to go to the notary and sign a new deed, or incur in more expenses.

For the constitution of the resolutive condition it must be paid AJD (Stamp Duty) tax, which in the Valencian Community is of 1.5%.

If you want to buy or sell a property in Spain, and you have any questions about this or any other matter, contact us and we will help you.

The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.

 

 

Carlos Baos (Lawyer)

White & Baos Lawyers

Tel: 966 426 185

E-mail: info@white-baos.com

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