Difference between suspensive and resolutive condition in the contract of sale

Jan 18, 2022 | Lagares News

The purpose of this article is to expose in a simple way the possibilities of proceeding to the sale of a property. It has become increasingly common to find conditions that limit the effectiveness of the contract of sale, linking it to the deployment of its legal effects in the future event of a certain fact called a condition, in order to offer greater legal certainty to the position of the contracting parties.

These conditions are admitted in law, but their inclusion in the contract of sale requires that both parties, buyer and seller, agree.

We will now explain the definition of this type of obligation together with its scope.

Conditional obligations, unlike pure obligations, are those whose effectiveness depends on the happening of a future and uncertain event, whose essence, moreover, does not reside in the futurity of the event itself, but in its uncertainty, admitting the establishment of a more or less time limit less extensive, even determined, in which the condition must or must not be fulfilled.

Therefore, by virtue of the interests of the parties and the circumstances of the operation, at the time of proceeding with the sale of a property, it must be taken into account that the party can agree on one or several clauses that make the effects of the contract depend on suspensive or resolutive condition, or even both at the same time.

  • Suspensive condition: one that makes the effectiveness of a contract and the enforceability of the obligations arising from it depending on a future and uncertain event as to the day, so that its full legal effects do not occur until the same is fulfilled. Lets take as an example the selling of a piece of land that, previously, must be granted an urban license that allows the land to be built on. The condition precedent of the contract of sale would be, in this case, the license to be granted. Once the condition is met, the obligation to deliver the property and the price arises. It is also possible that only the price and not the delivery of the property is subject to a suspensive condition; the latter will depend on the will of the parties.
  • Resolutory condition: it is the one that extinguishes the effectiveness of a contract already consented to be based on the occurrence of an event that is also future and uncertain at the time of contracting. For example, in an installment purchase contract with a condition subsequent to non-payment of the deferred price, the signing of the contract determines that the parties have to fulfill their obligations: the seller has to deliver the property and the buyer has to make the first payment. If the buyer fails to comply with any of the agreed terms, the contract will cease to be effective and the seller will recover ownership of the property.

As a sum up, depending on whether we are faced with a suspensive or resolutory condition, the sale unfolds its effects either when the condition is met. In the meantime, it will be found in a dormant phase, or it will cease to have its effects once the condition is fullfilled.


How is the resolution of the sale of property executed?

In case of non-payment of any of the price terms, the seller, in accordance with art. 1504 of the Civil Code, must necessarily require the buyer by notarial or judicial means. Once the buyer is required to resolve, he/she will no longer have the option to make the deferred payment to rehabilitate the contract of sale, thus leading to the termination of the sale and the birth of the obligation for the parties to return the respective considerations received, The buyer will return the possession of the property and the seller the price received; provided that no other consequences have been agreed in the contract in the event of termination, such as the total or partial loss of the amount delivered as price or interest as compensation for damages caused by non-compliance.

These conditions of contracting, together with others, which are not the subject of this article, make the sale of real estate an increasingly complex operation as it is subject to various controls and requirements of a contractual type, horizontal property regime, notarial, registry , tax, sectoral and urban planning, therefore susceptible to the introduction of complex agreements, although necessary due to its purpose of safeguarding the interests of the contracting parties, who require prior advice from professionals in this type of contract of sale.


María Ruiz
Lawyer. Procedural Department