Real estate defaults: resolving the sale (art. 1504 CC) and dation in payment

Article 1504 of the Código Civil (Civil Code) regulates the sale of real estate with a deferred price: although the contract may state that non-payment resolves the sale "by right", the buyer can pay late and save the transaction as long as they have not been required judicially or by a notarial act. Once the requirement is made, not even the judge can grant them a new deadline.

That is why the resolution requirement is the key piece: it is the seller's declaration, reliably notified to the buyer, that they consider the sale resolved due to non-payment. It is not a simple payment claim: it must clearly express the will to resolve.

A burofax is not valid to resolve. The Supreme Court (judgment of 4 July 2011, included in the doctrine of the General Directorate of Legal Security and Public Faith) requires the resolution notification to be judicial or notarial. The burofax is only valid as a prior payment claim and as proof of non-payment.

Managora drafts the requirement and organises its execution with the notary office: the choice of notario is always yours (art. 126 of the Reglamento Notarial (Notarial Regulations)); if you have no preference, we will propose one and manage the appointment. You can see the updated amount in the sale resolution procedure file.

First, a serious breach: the non-payment of the price or the agreed instalments, not a punctual delay already rectified nor a minor discrepancy. Second, the seller must have fulfilled their part: the person resolving cannot be in breach themselves.

Third, the requirement must respect what was agreed in the contract. If the registered resolutory condition grants the buyer a grace period (for example, 15 days or 1 month from the requirement, as is usual in deeds), that period must be granted and documented in the act.

Fourth, the buyer has the right to reply in the notarial act itself (2 working days, art. 204 of the Reglamento Notarial (Notarial Regulations)). If they oppose or claim to have paid or consigned, the act ceases to be a sufficient title to register the resolution: in that case, the resolution can only be imposed in a judicial procedure before the Court of First Instance, which requires a procurador (court representative) and is not included in the procedure or its price.

The resolution action prescribes 5 years after the breach (art. 1964.2 CC, wording of Ley 42/2015).

If the sale was guaranteed with an explicit registered resolutory condition (art. 11 of the Ley Hipotecaria (Mortgage Law)), the resolution is enforceable against third parties and allows the property to be re-registered in favour of the seller without a lawsuit, provided that the requirements demanded by the General Directorate are met: a correctly notified notarial requirement act, absence of opposition from the buyer and consignment of the amounts received.

The consignment under article 175.6.ª of the Reglamento Hipotecario (Mortgage Regulations) is full: the seller must deposit in a banking establishment everything collected, without deducting anything, even if the contract agrees on a penalty clause for the loss of the delivered amounts. The penalty, if disputed, is moderated by the judge (art. 1154 CC); the Registry does not liquidate it.

The penitential deposit (arras penitenciales) under article 1454 CC is a different way out: it allows withdrawing from the contract before consummating it. If the buyer withdraws, they lose it; if the seller withdraws, they return it doubled. Do not confuse the deposit with the resolution for non-payment: the 1504 route is used when the sale has already been perfected and the deferred price does not arrive.

If the buyer complies with the requirement, Managora formalises the resolution deed with reciprocal restitution and processes the cancellation of their inscription in the Land Registry (art. 82 LH).

Dation in payment (datio pro soluto) is an agreement by which you deliver the property to the creditor and the debt is extinguished in that same act, under the agreed terms. The assignment of assets for payment (datio pro solvendo, art. 1175 CC) is different: you deliver the assets for the creditor to liquidate them, and you are only released for the net amount obtained; if debt remains after the sale, it persists unless agreed otherwise.

Dation requires the express agreement of the creditor: it is a contract, it cannot be imposed on them. The exception is the Código de Buenas Prácticas (Code of Good Practices) (RDL 6/2012): if you are within the exclusion threshold defined by the rule and your entity is adhered, you can demand the dation of your main home as a substitute measure when restructuring and debt reduction are not viable, and stay up to 2 years as a tenant paying an annual rent of 3% of the total debt amount.

If the asset is real estate, the dation agreed in a private document is valid and binds the parties, but in practice it must be elevated to a public deed: article 1280 of the Código Civil (Civil Code) requires a public document for acts affecting real estate property and the parties can compel each other to execute it (art. 1279 CC), and without a deed the transfer cannot be registered in the Land Registry nor enforced against third parties. That is why the notarial route is the only one that closes the cycle.

Managora drafts the dation proposal addressed to the creditor, prepares the draft of the deed, coordinates the signing with the notary office you choose and processes the registration and tax settlement. The service amount is in the procedure file.

Dation is taxed under ITP, in the onerous property transfers modality, as an adjudication in payment of debts (art. 7.2.A of the texto refundido del ITPyAJD (consolidated text of the ITPyAJD)). The taxpayer is the acquirer: the creditor receiving the property, at the rate of the autonomous community where it is located. If the transferor is a business owner and the transaction is subject to VAT, it may accrue AJD instead.

The plusvalía municipal (local land tax) corresponds in principle to the transferor, but it is exempt when it involves the dation of the main home of the mortgage debtor or their guarantor to cancel debts guaranteed by a mortgage on that home, contracted with credit institutions or entities that professionally grant mortgage loans, provided that neither the debtor nor their family unit have other sufficient assets to pay the debt (art. 105.1.c of the texto refundido de la Ley de Haciendas Locales (consolidated text of the Local Treasuries Law)). The main home is considered to be the one where you have been registered on the padrón (town hall registration) for the previous 2 years, or since the acquisition if it is less.

In IRPF, the capital gain that emerges upon delivering the home is exempt under the same requirements (art. 33.4.d of Ley 35/2006), and the exemption also covers transfers in judicial or notarial mortgage execution. It has been in force since 1 January 2014.

Outside these cases (second residence, private creditor, debtor with other assets) the dation is taxed by the general rules: capital gain or loss in IRPF and ordinary plusvalía municipal, which since RDL 26/2021 is not paid if you prove that there was no real increase in value.

If you are the seller and the buyer does not pay the deferred price, your route is the resolution under article 1504 CC: you recover the property with a notarial requirement, without a lawsuit if the buyer does not oppose.

If you are the debtor and cannot pay, your route is dation in payment: you deliver the property, extinguish the debt and, if it is your main home against the bank, without IRPF or plusvalía municipal costs.

In both cases Managora prepares the complete file through the notarial route: we review your contract and your debt, draft the requirement or the dation proposal, organise the signing at the notary office you choose and register it afterwards in the Land Registry. What neither of the 2 procedures includes is the judicial procedure if the other party refuses: we will tell you clearly before you spend an extra euro.

You can start the sale resolution or dation in payment procedure now: the updated amount for each is in its file and we do the rest.