The lock-down caused by COVID-19 has affected many areas of Spain with travel restrictions and other limitations, so in this article we will briefly explain how this affects ongoing purchases. We are referring to sales between individuals that were already underway with signed private purchase contracts, but were ‘surprised’ by the COVID-19 crisis, and the measures adopted by the Spanish government decreeing the state of alarm.
Under Spanish law the clauses agreed in a contract have full force of law and the parties are required to fulfil them. The Spanish Supreme Court, when dealing with potential breaches of contract, and to avoid a loss of money, has established that the party in breach has to provide evidence and argue the reasons behind said breach, as well as to prove that they did everything possible to fulfil the contract. However, even after establishing the impossibility of fulfilling the contract, the parties must seek to modify the contract to solve the problem. As in the case of the state of alarm and the COVID-19 Corona crisis.
The conveyance contracts affected by COVID-19 are those where either seller or buyer can not complete the requirements or conditions agreed in the private purchase contract due to these months of paralysis. For example, we can mention the following:
- Deadlines for signing the title deeds.
- Impossible for either of the parties to attend the notary office, due to movement restrictions.
- For the conveyance contract to establish the condition of being granted a building permit or the record for legalisation of a home, such as DAFOin rural homes in Andalusia.
- For the condition of obtaining a mortgage as many processes have been paralysed making the average resolution time much longer than initially expected.
- The impossibility of obtaining an NIE (foreigner’s identification number) necessary to sign a conveyance contract before a notary, and pay the corresponding taxes.
- Either of the parties being admitted into hospital or in quarantine.
In most situations, it is only a matter of time for the agreements to be fulfilled. In conveyance processes where the title deeds cannot be signed for reasons arising from the coronavirus crisis, both parties should agree and extend the contract to provide time to the party that needs it in order to complete the sale/purchase.
In the event of inflexibility, and the refusal of either of the parties to grant such an extension to the conveyance contract, in most cases there would be no legal grounds to terminate the contract and/or claim damages.
However, these sales processes starting prior to the COVID-19 crisis can lead to complex situations that should be analysed individually, and always with the advice of a lawyer. This is not the time to make decisions without the appropriate legal knowledge, taking into account that a private conveyance contract has already been signed. This decision is too important to rush.
Interested about more information on buying or renting out a house in Andalusia? Please visit our website and watch our tutorial videos on how to go about buying a house in Spain.