The coronavirus crisis is affecting the real estate market and particularly to foreigners who had made their purchase prior to the arrival of the pandemic. Most of those buyers are now in their countries of origin and unable to return to Spain because the borders are closed.
Many are following the news and waiting for the Spanish authorities to announce when the borders will be open again, so they can return to Spain to complete their business transaction on their home purchases.
WORK ALLOWED IN THE NOTARIES DURING THE COVID-19
During this alarming period, notaries are only obliged to attend urgent actions that are of priority. Down payment contracts or the purchase of a home would not be understood as ‘urgent’.
These urgent actions include deed signatures for example, people who are facing hardship in collecting rent and need shelter to their new home.
It also appears that some procedures are being resolved by digital signature, but this is also limited to Spanish citizens.
SOME EXAMPLES OF AFFECTED CONTRACTS
Within the types of contracts for the purchase of homes that have been left in the air we will mention the next…
DOWN PAYMENT CONTRACTS
signed between private buyers and sellers. E.g: the future buyer transfers an amount of money to the seller, thus reserving the right to purchase but taking into consideration a penalty in the case of any of the parties breaching the contract.
– Would these penalties be justified if the sale cannot be made effective?
According to some sources within the legal profession, if this period coincides with the state of alarm, it must be extended until the end of the emergency and the penalization to one of the parties or the cancellation of the contract could not be applied. But it’s very important not to take last as general law and consider that we will need to investigate each of the cases in order to know what is applicable or not.
OFF-PLAN SALES CONTRACTS where buyers have already signed and are complying with a payment schedule.
There are some large developers that have agreed to postpone the payment of the next monthly installments of their off-plan homes but there are other developers that have not made any adjustment.
– Would the seller be protected in the case of not being able to deliver the house on time?
According to some sources in the legal profession, it would be considered as an unexpected impossibility of fulfilling the contract not attributable to the promoter or seller, which would allow the delay in the delivery and even the cancelation of the contract.
– When would the buyer be entitled to recover the quotes already paid?
It seems that only in certain circumstances: for example, if there is a date when the buyer must leave his rental house and the delivery of the new home is significantly delayed (not a simple delay of days or a week), this will constitute cause for resolution with the buyer’s right to recover the quotes.
– What would happen if the construction company goes bankrupt?
According to experts, the responsibility of the developer or seller is not diminished by the economic difficulties of the construction company.
We would like to advise to the thousands of foreign buyers that are in a situation of stress to do not just wait in order to see what will happen with their homes but to contact their developers. The new circumstances might require modifications and if that agreements are not possible it’s advisable to contact professional attorneys and experts in real estate.
A reminder in order to end the article: real estate is considered as one of the less risky places to invest in times of crisis. Property can always provide a return as a tangible asset and there are reasons to believe the market will recover quickly.