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Can I pull out from a signed purchase/sale contract of a property?

Juan Ramón Correas [Lawyer]

When you are buying or selling a property in Spain, normally the initial step of the transaction would be signing a private contract with the other part, where you would be paying (if you buy) or receiving (if you sell) a deposit. If circumstances change –or simply, you just change your mind- and you prefer not to continue with the transaction, is it possible to pull out from it? Or could you be forced to complete the purchase/sale of the property?

The wording of the contract will be of paramount importance. Depending what the contract says, you may have the chance of cancelling the contract or not.

The scenario we are contemplating is a cancellation of the contract just because you prefer not to continue. It is to say, the cancellation would not be based on a breach of contract by the other part; it would just be based on your unilateral decision: you just changed your mind (you prefer not to buy it/sell it; you prefer to buy it/sell it to somebody else; etc.).

If this is the case, there are two possibilities:

  1. The contract is worded in a way that authorises you to pull out of it at any stage, without the need of cause or explanation. In this case, you would have to be prepared to lose the deposit paid or reimburse the deposit received multiplied per two (for instance, if you received 5.000.-€ deposit, you would need to refund those 5.000.-€ plus an additional sum of 5.000.-€ more), depending if you were buying or selling.
  2. The contract is worded in a way where, if you prefer not to continue with the transaction, the other part could force you to complete it (and also, demand compensation for the damages suffered for initially not fulfilling the contract as agreed).

As you could see, it is very important to receive proper legal advice if you are buying/selling property in Spain. That way you could be informed of all the possible scenarios and focus the contract in the best possible way to protect your interest.

We hope that the previous information is helpful, but please do not hesitate to contact us with any question or comments.

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

Can I buy/sell/inherit my Spanish property without going to Spain in person?

Juan Ramón Correas [Lawyer]

The current circumstances created by COVID-19 have made very difficult for UK citizens to come to Spain. And this might also be the case in the future (let’s hope the situation improves soon enough).

In this scenario, you may wonder if there is any chance of completing a transaction in Spain without having to come in person. The answer is yes, indeed, there is an alternative: granting a power of attorney.

By signing a power of attorney you would be granting some faculties to a person in Spain (usually a lawyer, as they are specialist in the transactions we are talking about, but it could also be a relative, a friend, etc.), and that person would be able to complete your transaction in your behalf.

It could be very helpful to complete the purchase of your new Spanish property, the sale of the Spanish property you already own, or even winding up the estate of a relative who passed away and left you his/her Spanish assets, without having to be in Spain personally.

The process is not complicated and in JR Correas – Abogados we will take care of guiding you through it: we will prepare the form (in Spanish and English, so you know exactly what you are signing and there is no need for expensive official translations), send it to you and you will just need to get an appointment with a local Notary in the UK to sign it before him/her.

Of course, granting a power of attorney should only be done in favour of a person that is trustworthy. Note that the person appointed would be able to act on your behalf, so it is very important that the person appointed follow your specific instructions and nothing else: that is why you need to make sure that you grant it in favour of a reliable person, with the necessary professional skills to complete the task.

We hope that the previous information is helpful, but please do not hesitate to contact us with any question or comments.

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

Can I get a rent reduction due to COVID-19?

Juan Ramón Correas [Lawyer]

The “rebus sic stantibus” clause is what would normally be alleged by the tenants as the main legal argument to obtain a rent reduction, in the current circumstances. This clause, which is not written in any Law, but recognised by the scientific doctrine and applied by the Courts, needs an event as its trigger and demands some requirements to be applicable and recognised by the Courts:

  1. Change of circumstances. The event should involve a rupture of the economic cause of the contract, which originally was impregnated with a balance on the obligations of the parties.
  2. That the event was unexpected and impossible to prevent. It demands that the situation created by the event where not included within the risks assumed by each party, according with the normal development of the contract (expressly or implicitly).
  3. It must constitute a real burden for the party damaged. The impact of the change of circumstances should be very relevant, “excessive”, in connection with the economic base affecting the constitution of the contract. Not any economic damage will be eligible to apply this clause: it should really be relevant and excessive for these purposes.
  4. Subsidiarity. The rebus sic stantibus clause will not operate if there are provisions in the contract to provide the effect that the damaged party is looking for.

The mentioned requirements are based in the Sentences granted by the Supreme Spanish Court (amongst other, Sentences of 30 June 2014 and 15 October 2014), and are just a resume of a much longer and motivated legal exposition. It is true that in the mentioned Sentences the requirements demanded by the Courts to apply the clause have been reduced from previous Sentences, and a more flexible application from that moment onwards has been defended. However, the application still (and always) should be applied cautiously and always considering the particular circumstances of the case, as the contracts are Law to the signing parties and they should be interpreted and executed according with the good faith principles (art. 1.091 and 1.258 Spanish Civil Code).

Taking this into consideration: Is the present situation created by Covid-19 enough to apply the “rebus sic stantibus” clause and, consequently, get a rent reduction? As mentioned before, there is not a clear general answer. An individual and specific study of each situation should be made before providing a specific recommendation, taking into consideration many factors as the wording of the contract, the particular economic situation of the landlord and tenant, etc.

One thing that we can recommend without any doubt: it would always be better trying to achieve an agreement with the other party than imposing our position. Normally, the initiative would be taken by the tenant (the party that would have his business closed or damaged), contacting the landlord and promoting an agreement (normally a rent reduction, but also suspension or delay in payment). It is also true that some landlords have preferred to contact directly with their tenants to offer them possibilities to sort out the difficult situation.

If a possible negotiation has totally failed and there is no other alternative for the tenant, that would be the only possible scenario where we would then recommend to consider the possibility of taking the initiative and start actions (including, if necessary, going to Court) to get a positive effect (normally a rent reduction). It is uncertain how Courts will react to these cases, but sometimes desperate times require desperate measures.

We hope that the previous information is helpful, but please do not hesitate to contact us with any question or comments.

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

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