Carlos Baos: Conveyancing – Non-payment of the purchase price by the buyer

Is it possible to cancel the contract? How should it be done to avoid problems? Take a look at expert legal advice from Spanish Lawyers.

In today’s article, we are going to analyse one of the most critical issues in any purchase and sale of real estate property in Spain. What happens when the buyer fails to honour the contract and is unable to pay the agreed price? How should both vendor and buyer act in order to avoid further problems?

The key condition of any sale and purchase is always the same: the payment of a certain amount of money in exchange for a specific property. However, when the time comes to finalise the contract and sign the public deed in the Notary’s office, the buyer may not be able to pay the agreed price. In such cases, the Spanish Civil Code is clear: when the buyer breaches the contract, the vendor can terminate it. This is established in article 1.124 of the Spanish Civil Code, which states that in cases of non-performance, the aggrieved party may choose between:

1. Demand performance of the contract.

2. Extinguish the contract.

In both cases, the vendor is entitled to claim damages and interest.

However, the termination of the contract must be made in accordance with very specific formalities. Otherwise, the contract could be understood to still be in force, despite the buyer’s failure to pay. Art. 1.504 of the Spanish Civil Code outlines the proper way to proceed.

In order for the vendor to be able to terminate the contract and separate himself from the buyer, it is necessary for him to formally request payment either by means of a notarial requirement or a judicial request. Otherwise, the buyer and vendor would still be “bound”, and the latter will not be able to sell the property to someone else. Even if it is stipulated in the contract that non-payment entitles the seller to terminate the contract unilaterally, it will be necessary to carry out the termination in accordance with the formalities of art. 1.054.

The resolution/termination of the contract is an event of major importance, that must be carried out correctly in order to avoid problems. At White Baos we are experts in real estate law. If you want to buy or sell a house and seek expert legal advice, do not hesitate to contact us.

You may be interested in the following services and articles:

Can I request the termination of a property purchase contract and claim my money back if I am not able to get finance?

Resolution, cancellation of contract to purchase a property. How to do it? What must be considered?..

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

Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

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