Purchases of real estate subject to a resolutory condition – or subsequent condition for termination – form a casuistry that is frequently dealt with in the rulings of the DGSJFP, especially with regard to the re-registration of the previous ownership of the property when the resolutory condition is fulfilled.
In the words of the Resolution dated 15 February 2024 (BOE 14 March 2024), citing, in turn, Ruling 616/2021, dated 21 September, of the Supreme Court: ‘The registration of the explicit resolutory condition attributes real effectiveness to the resolutory action of the contract. This avoids the ineffectiveness of said condition by preventing the appearance of third parties who are immune or not affected by it because they meet the requirements of article 34 LH (the legal cognoscibility of what has been registered prevents the allegation of ignorance) – which could render the intended resolutory effect inoperative -, as the retroactive effect of the termination, whether due to an express resolutory condition, or due to breach of the bilateral obligations, does not reach third parties acquiring in good faith (…).’.
As is well known, once the resolutory event has occurred, Article 176 of the Mortgage Regulations is applicable, which states that ‘the registration of the sale of property subject to rescission or resolutory conditions may be cancelled, if the cause of the rescission or nullity is registered, by presenting the document accrediting that the sale has been rescinded or annulled and that the value of the property or the amount of the instalments, with any deductions that may be applicable, has been deposited in a bank or official savings bank, which is to be returned’. However, it is necessary to remember that the termination of the sale of real estate is subject to the requirement of prior notice of payment, as established in Article 1.504 CC.
In this very brief review we will deal with two circumstances that may orbit around the re-registration of the original title. The first of these deals with the effectiveness of a penalty clause agreed between the parties with effectiveness, even against third parties, due to the effect of its registration; and the second of these deals with the requirements to be met by the executor in order for the registry purge of rights to take place after the registration of the resolutory condition.
1ª ) Effectiveness of a penalty clause against the purchaser and third parties.
The aforementioned Resolution of 15 February 2024 resolves the refusal of a land registrar to register a penalty clause for the retention of the price by the seller, exempting him from the deposit prescribed by article 175 RH, with effects not only against the purchaser, but also against any possible third party to whom the ownership of the property had been transferred in force of the resolutory condition.
In short, in its decision, the Authority establishes that the resolutory condition is registrable, since, in essence, it is not only the purchaser but also any third party to whom the resolutory condition has been transferred in force:
˗ The complete wording of the condition expressly provided that in the event of non-payment of the price, the seller would ipso iure recover ownership of the property, in which case the seller could retain any amount delivered, exempting it from the obligation established by article 176 RH.
˗ The condition established that the buyer expressly waived the moderating power of the courts, even in the case of partial or irregular performance (art. 1.154 CC), in consideration of certain facilities in terms of time and interest that the seller granted it; a provision that is in line with the doctrine of the Supreme Court (STS 341/2020 of 23 June and STS 317/2022 of 20 April). For this reason, the purchaser loses the possibility of claiming at the registry office that the clause should be moderated.
˗ The buyer was not a consumer, so consumer legislation, which protects the interests of the consumer, was not applicable.
The resolutive condition, with the indicated penalty, once registered in the Land Registry, is enforceable not only against the parties but also against any third parties (Resolution dated 15 January 2021), emphasising that, if any deduction is allowed in the obligation of deposit, the deduction must be completely determined and quantified, a condition fulfilled in this case, since the entire deposit is deducted.
2ª) Purge of rights after registration of the resolutory condition.
Although it orders the registration of the resolutory condition with penalty clause, the abovementioned Resolution of the Centre also makes special reference to the protection of rights registered subsequently. Specifically, citing previous resolutions of 26 May and 28 September 2021, it is recalled that ‘it is one thing to publicise the condition, and another to unravel it by means of the appropriate legal action, at which point a new right comes into play, that of effective judicial protection, which is not sufficiently protected by the simple registration of the condition, but which also requires that it be accredited that the third party purchasers and holders of subsequent charges have had the possibility of trying to enforce the condition’. This, according to STS 616/2021, of 21 September, means that ‘in the event that no preventive annotation has been made of the claim filed to obtain the judicial declaration of termination and the cancellation of the subsequent entries, the holders of the corresponding registered or annotated rights have had the opportunity to intervene in the judicial proceedings to argue whatever is of interest to their rights, especially on the premises and grounds for the termination’.
For cases of extrajudicial enforcement of the resolutory condition (simple request to the RP), it is indicated that ‘in relation to the holders of rights registered or recorded subsequent to the condition, it is necessary that the documentation complies with minimum guarantees or, failing this, the appropriate judicial resolution must be obtained (Resolutions of 28 May 1992, 19 November 1996, 24 February 1998 and 15 November 2005), as they do not necessarily have to bear any act of admission of non-compliance or of the other conditions of the termination. This is to avoid the transferor and acquirer entering into agreements on the termination (anticipation of the termination, reduction of the amounts to be deposited, etc.), to the detriment of the position of third parties who have not given their consent’.
This administrative doctrine has been reiterated in the Resolutions of the Management Centre dated 6 June 2024 (BOE 5 July) and 22 July 2024 (BOE 9 October), which emphasise that the mere registration of the resolutory condition does not in itself protect the holders of the rights subsequently registered, so that the preventive annotation of the claim in which the resolutory action is exercised is necessary, in order for them to be able to assert their rights. Literally, it is quoted that ‘the exercise of the power to purge subsequent entries arising from the resolutory condition requires either that the claim for its termination has been previously recorded in the Register, or the intervention of the holders of the indicated entries in the corresponding termination procedure in order to avoid their defencelessness’.
In short, as a general criterion: before purging the rights subsequent to a registration, the owners must be informed in order to enable them to exercise the rights that may correspond to them, and this both in enforcement proceedings (art. 659 LEC) and in other proceedings that may produce a change in the registered ownership of a property, such as the termination of a contract of sale.