Purchase Contract resolution or termination. Failure to pay the price by the buyer. Notary request. Legal actions and advice.

AS lawyers, when we face a contractual dispute and a possible claim or legal action, related to the possibility of terminating (resolving) a sale contract, in Spanish law it is essential to know article 1124 of the Civil Code (CC),

Basically, this says that the dispute can be resolved in the event that one of the parties has not fulfilled its obligations and that the affected party may choose between requiring the fulfilment of the contract or by cancelling provided that damages and interest are paid.

This rule must however be interpreted in accordance with article 1504 of the CC, in the case of purchase contract of real estate properties with deferred prices, that is, most real estate purchase and sale agreements, since normally a deposit is paid at the beginning and the rest of the price is paid, at completion when signing before a notary.

Thus, article 1504 says:

In the sale of real estate, even if it has been stipulated that due to non-payment of the price in the agreed time, the termination of the contract will take place, the buyer may pay, even after the term has expired, if in the meantime it has not been requested judicially or by a notarial deed. Once the request is made, the Judge may not grant a new deadline.

Therefore, in such cases, even if the buyer does not pay the rest of the price within the agreed term, he may pay it after the deadline, unless he has been instructed separately by a judiciary or a notary.

It follows that if we are sellers, who have signed a sales contract and our buyer does not pay, in order to resolve the contract, it is normal to send a notarial request.

This request must be acknowledged by the buyers as if it is not received by them or their legal representatives, it will have no effect.

Although, there is no unanimous interpretation on the nature of this request, the vast majority understand that it must be resolutive, that is, that it must express clearly the will to terminate the contract for non-payment.

As has been pointed out by the Spanish Supreme Court, legally it is possible that the situation requires payment to the buyer within a specific period and it also indicates that in case of not doing so, the contract will be understood to be resolved or terminated, that is, a payment and resolution requirement or request contained in the same document.

If you want specialised legal advice on claims and legal actions resulting from real estate purchase contractual breaches, non-payment, etc. contact our law firm and we will help you.

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

Carlos Baos

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

White & Baos 2020 – All Rights Reserved.

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