Breach of contract ii

BREACH OF CONTRACT AND SPANISH PROPERTY (ii)

 

What happens if a property buyer do not pay the price in time according to the Spanish law.

What happens if a buyer doesn’t pay the full purchase price for a property on time?

As strange as it may seem, this situation whereby the person buying a property fails to pay the agreed purchase price in full, or even the majority of it, in the allotted time given, is a typical case of breach of contract in the real-estate business.

Breach of contract in general

I have explained the general consequences of a breach of contract with regards to purchase and sale agreements in another post. Basically, the general rule is that the party who has fulfilled its part of the agreement can ask for the contract to be annulled provided that the breach made by the other party results in the non-fulfilment of an essential and important duty, thus frustrating the whole procedure and agreement for the party who has complied with their side.

Breach of a property sale and purchase contract

However, in the case of a property purchase and sale contract there is an extra clause. Even if both parties have previously agreed that the non-payment of the purchase price in due time will automatically mean the cancellation of the contract, in reality, this is not strictly the case. And that’s because the law requires the vendor to formally notify the buyer at the time payment is due, requesting that the outstanding payment be made and then giving the buyer more time to pay or informing them that the contract will just be cancelled. Nevertheless, it is essential for the vendor to make this formal notification/request otherwise cancelling the contract would not be legal. Therefore, until the notification/request is made by the seller, the buyer will be able to pay the outstanding amount due and complete the purchase, and the seller will have to deliver the property even if the deadline date expired long before.

Conclusion

I think this is important to know, especially in private transactions where the parties might not be aware of this extra clause. Without this knowledge, and in the case that the purchase price was not settled in time, the seller might take out a lawsuit against the buyer but would lose if he had failed to make this formal notification/request. In this case, the judge will be able to give more time to the purchaser to fulfil the deal. What is more, unfortunately, trials in Spain are quite lengthy, and this could result in a great waste of time and money.

Thank you

Thank you for your time and attention and I hope this information is of use. You are very welcome to share if you liked it. You might be interested in this other posts: conveyancing, penalty clause, or taking a property off the market.

Warning

Please, note that this is general information. This is not specific legal advice. It is advisable to seek legal advice for any specific legal issue.