Common Real Estate Legal Scenarios and Solutions: A Practical Guide
1. Unpaid Deferred Price and Resolution of Sale
Scenario:
Joseph sold a farm to Beatrice with a deferred payment plan. The deed, registered in the Land Registry, includes a clause stating that non-payment will automatically lead to the resolution of the sale. Beatrice defaults on payment. What are Joseph’s options?
Practical Solution:
If both parties agree to the resolution and no third parties are involved, Joseph should request a judicial or notarial fee from Beatrice, accompany the title deed, and pursue a judicial action for adjudication and declaration of resolution.
Grounds:
Art 1124 CC, Art. 59 HR and R. DGRN of 29/12/82
2. Impact of Subsequent Sale on Contract Termination
Scenario:
Following the previous case, what happens if Beatrice sold the farm to Charles before the resolution of the sale with Joseph?
Practical Solution:
Due to the explicit condition subsequent, a new registration in favor of Joseph is required, canceling Beatrice and Charles’s ownership registration. A marginal note would be insufficient.
Grounds:
Art 175.6 RH
3. Validity of a Gift Deed with Restrictions
Scenario:
A gift deed states, “Mr. A donates the property to his son B, who accepts, with a ban on acts inter vivos during the donor’s lifetime.” Can the property be foreclosed on during A’s lifetime if B is facing enforcement proceedings?
Practical Solution:
Yes
Grounds:
While voluntary restrictions on gratuitous transfers are generally permitted and registrable, they cannot be used to exclude the property from foreclosure proceedings. This is in line with the principle of universal financial liability.
4. Registrar’s Checks for Sale of Leased Property
Scenario:
Ana Isabel sells a leased apartment. What checks will the Registrar perform before registering the transfer?
Practical Solution:
The Registrar will verify compliance with the tenant’s right of first refusal as outlined in Article 25 of the Residential Tenancies Act 1994, ensuring proper notification procedures were followed.
Grounds:
Art 25 LAU 1994
5. Distribution of Funds in a Mortgage Auction
Scenario:
A property valued at 30 before construction work has the following charges: 1st mortgage (H) for 36, a preferential credit (R) for 15, and an attachment (E) for 6. The 1st mortgage is executed, and the auction proceeds amount to 40. How will the funds be distributed?
Practical Solution:
H will receive 30, and 10 will be made available to R.
Grounds:
Art 64.1 RH. The first mortgage is paid first (up to the pre-construction value), followed by the preferential credit. The attachment is purged as it’s a later charge and insufficient funds remain.
6. Recording a Defensive Caution in a Personal Action
Scenario:
A sues B for 7,000 euros and requests a defensive cautionary notice on B’s property in the Land Registry. Can the judge grant this request?
Practical Solution:
No
Grounds:
This is a personal action that doesn’t directly affect the property’s ownership or create a real right, thus not eligible for registration. Article 2, 42.1 LH
7. Impact of a Lawsuit on Subsequent Property Sale
Scenario:
A sues B, the registered owner of a property, and the lawsuit is recorded in the Land Registry. Before the judgment, B sells the property to C, who registers the purchase. If the court rules in favor of A, what happens to C’s registration?
Practical Solution:
C’s registration will be protected, but it will be canceled through appropriate judicial procedures. The annotation served as a warning that B’s ownership was disputed.
Grounds:
Art. 198 RH.
8. Negatory Action Against a Non-Registered Tenant
Scenario:
A, the registered owner of a building’s first floor, files a negatory action against B, a non-registered tenant of a commercial premise in the same building, for installing a vent that obstructs A’s window. Can A request a preventive annotation on B’s premise?
Practical Solution:
No
Grounds:
The principle of chain of title (Article 20 LH) prevents annotations against non-registered owners. The tenant is not the registered owner. Also, R. DGRN of 25 February 1994.
9. Minimum Bid in an Auction to Acquire Property Free of Charges
Scenario:
A property has the following charges: 1st mortgage for 16, attachment A for 12, 2nd mortgage for 8, and attachment B for 2. An auction is held to execute attachment A. What is the minimum bid required to acquire the property free of charges, without paying more than 40 in total?
Practical Solution:
24
Grounds:
The bidder must cover the 1st mortgage (16) to obtain the property free of charges. Of the 24 bid, 12 goes to attachment A, 8 to the 2nd mortgage, and 2 to attachment B. The remaining 2 go to the property owner or debtor. The purge system ensures that later charges are cleared, and their holders are entitled to any remaining funds.
10. Extension of a Preventive Embargo Annotation
Scenario:
A warrant issued on 30/04/2005, ordering a preventive embargo annotation, was presented in the Land Registry on 10/05/2005 and registered on 15/05/2005. Can an extension be requested on May 11, 2009?
Practical Solution:
Yes
Grounds:
The four-year timeframe for extension is calculated from the registration date (15/05/2005), not the presentation date, as an exception to Article 24 of the LH.
11. Impact of Usufruct Cancellation on Bare Ownership and Mortgage
Scenario:
The Land Registry shows A as the usufruct holder and B, his heir, as the bare ownership holder. B mortgaged his bare ownership. A’s death certificate is presented, requesting the cancellation of the usufruct. What happens to B’s bare ownership and mortgage?
Practical Solution:
The ownership will consolidate in B, merging the bare ownership and usufruct. The mortgage, unless specified otherwise, will extend to the full ownership.
Grounds:
Art LH 107.2ยบ regarding the bare ownership mortgage. The cancellation of usufruct through a private document is an exception to the principle of public ownership (Art. 3 LH).
12. Significance of a Certificate of Charge in a Simple Note
Scenario:
A requests a simple note for a property and receives a footnote on a preventive seizure annotation: “Issued certificate of charge of this estate, in accordance with Art. LEC 688.” What does this note signify? Is it advisable to purchase the property while retaining the lien amount?
Practical Solution:
The note warns potential buyers that the property is subject to ongoing enforcement proceedings. It is NOT advisable to purchase the property while retaining the lien amount.
Grounds:
The note is based on Arts. 656.2 LEC and 143 RH. It’s possible that the property has been acquired by a third party in the auction. Thorough due diligence is crucial to ensure a secure purchase.