The economic repercussions caused by COVID19 and its consequence, for the time being the confinement measures adopted in Spain leaving only those activities that are considered essential services in operation, are a real blow to thousands of people who find themselves in difficult economic situations and with commitments acquired such as those derived from a rental contract, a mortgage, an earnest money contract for a real estate sale and purchase, etc.

We would like to give a brief outline in this real estate page about the legal measures adopted in this field as well as some assessments that we consider necessary to clarify the panorama that can create confusion.

Do not hesitate to contact us with any questions you may have at
real estate lawyers in Alicante
Carlos Baño León any question that has not been contemplated in this necessarily brief text to avoid the little operability by excess of information of our web page.

URBAN LEASES – Impact of Covid 19 on the real estate market

One of the priorities has been to guarantee that no one will be evicted or thrown out of their home during these dates and for a period of time as long as they are in a judicial eviction procedure and as long as they meet certain requirements.

The rule distinguishes between those cases in which a launch and hearing date has already been set and those in which it has not yet been set.

In the first case, it is established that these persons, provided that they can prove a situation of economic and social hardship, as a result of the COVID19 , which makes it difficult for them to find other housing, may appeal to the Court’s attorney to obtain a suspension of the already agreed upon launching. The Social Services will assess the concurrence of cause and, if so, the launching period will be suspended for a period of time as soon as the state of alarm is lifted.

If no appointment has been made, the proceedings will be suspended and will be governed by the provisions of the

established by the social services, agreeing to a suspension of the processing until the measures are adopted, for which there will be a period of 6 months, after which the period will be resumed.

If this situation were to put the owner in clear economic distress, the owner who could

If the same detrimental situation arises, the allegations of the tenant must be taken into account by the Social Services when deciding on the duration of the suspension in favour of the tenant.

In the Royal Decree 11/20 of March 31 published in the BOE of April 1, 2020, among other measures, has been approved the suspension or removal and reduction of the monthly rent of housing to those people who are in a situation of economic weakness.

It will only apply to residential leases, never to other properties, and this is important to say because we have clients who own premises, warehouses or other properties.We have received calls from tenants who have told us that they have received communications from their tenants requesting the suspension of the payment of the rent or the reduction or reduction of the amount, and we must respond firmly that they cannot avail themselves of this possibility, which is only available to those who are tenants of housing intended for family use.

The aforementioned Legal Text establishes the economic conditions that characterize the situation of economic vulnerability, the way to justify it, and the procedure for its accreditation before the owner of the dwelling, establishing a procedure for it.

EARNEST MONEY CONTRACTS

In the obligatory or contractual field, the current situation may cause momentary problems in obtaining financing for the payment of the outstanding purchase price and, what is the same, it may be impossible in these circumstances to carry out the notarial deed of sale.

If you have signed an earnest money contract as a buyer and you are close to the date of the deed, and you are facing momentary difficulty to do so, we believe that the current situation may mean a momentary tranquility because the strict measures of operation of the Notaries, whose work is limited to urgent actions or of necessity and whose work has been substantially slowed down by the need to regulate the presence of people in the Notary’s office, substantially limiting the number of daily notarial operations that can be carried out each day, means that the dates for deeds have to be cancelled due to the impossibility of going to the Notary’s office on these dates, as they have established a very tight work schedule where the deeds are taking a very long time to be executed.

If you would like to take a date right now, you must carry out a whole series of procedures before the Notary Association, which will mean that the date of the deed will be postponed to a very late date and this will become more complicated as the current situation lengthens.

Our advice is to negotiate, as this office is doing with our clients, an extension of the deadline, since the most practical solution is to modify the deed deadline, delaying or postponing it for a few months, which will not be particularly difficult due to the current circumstances.

SALES

But can there be any reason, any cause that justifies such a breach of this principle?

As a result of the major economic crisis that hit Spain, among many other countries, since 2008 there have been many situations of serious economic damage that caused many lawyers to try before the Courts and Tribunals to exempt their clients from fulfilling their obligations.

It can be said that the result was that very few of these claims came to fruition and now, in the wake of the special situation we are experiencing with the COVID 19 pandemic, many are perhaps wondering, as they once did with the economic crisis, whether they can neglect their legal obligations.

The free will of the parties, which is a principle of contract law from which the principle of “pactun sum servanda” derives, prevents the buyer from invoking any circumstance to delay payment of the agreed price or instalment.

In this regard, the Spanish Courts are very clear and categorical in denying the admission or estimation of the allegation of the “clausula rebus sinc stantibus” as a defence for impossibility of fulfilling an obligation due to force majeure not foreseeable at the time of assuming the debt.

Impact of Covid 19 on the real estate market

MORTGAGE

Royal Decree 8/20 of March 17, 2020 on the adoption of measures to address the economic impact of the COVID19 establishes, among other measures, the possibility of deferrals in the payment of quotas to persons who can prove a situation of economic vulnerability previously defined in the legal text.

In summary, the moratorium on mortgage debt for the acquisition of the habitual residence of those who suffer extraordinary difficulties to meet their payment as a result of the COVID-19 crisis is made possible.The measure is applicable to guarantors, as long as the loan is secured by a mortgage for the purchase of their principal residence.

The creditor entity will proceed to its application and during this suspension period the early maturity clause may not be applied; nor may ordinary interest be demanded, nor late payment interest, nor any type of expense or commission.