The right to desist from a sale/purchase transaction funded by a third party

In accordance with the article 621-49 of the Civil Law of Catalonia, the buyer has the right to desist from a Sale/Purchase Contract in which the transaction is funded by a third party (credit institution).

What does this right consist of?

Article 621-49 of the Civil Law of Catalonia serves to prevent the buyer from being obliged to fulfil the terms of a contract if said party lacks all or part of the money needed to comply, thereby avoiding any negative consequences this failure may entail.

How do I exercise this right? Is it directly operational?

Let us first look at the text of the rule: 

“Article 621-49 Forecast of third-party financing”

1. If the sale/purchase contract states that a credit institution shall be funding all or part of the cost of the transaction, the buyer shall, unless specified otherwise, have the right to desist from the contract subject to providing documented proof, within an agreed period of time, of the credit institution’s refusal to grant the funds or accept the subrogation of the mortgage on the property, except when the refusal is related to negligence by the buyer.

Considering the wording of this regulation and the effort to protect the buyer, we understand that if all or part of the cost is foreseen to be funded by a third party, this rule is applicable unless, of course, the opposite is stated in the contract, i.e., that the buyer waives this right, or does not anticipate the price being funded by a third party. 

Whatever the case may be, considering the slightly ambiguous nature of how this rule is interpreted, it would be advisable to always state clearly whether there is the possibility of a third party funding the transaction, or not, and the conditions under which this protective provision is set forth.

Which are the most complex circumstances when drawing up a clause foreseeing third party funding?

The most difficult circumstances when interpreting this rule and applying it arise when the contract requires documented proof, within a stated period of time, or under other limitations which complicate its efficiency, justifying the reason for which the buyer wishes to desist. As a matter of fact, certain limitations ex lege, could generate doubts regarding the validity, as they curtail a legal right. It is consequently very important to draw up this provision fairly and with reasonable delays.

Does this rule apply to all types of buyers, who or whatever they may be?

This article seems to be drawn up in a wide sense; apparently not only private people can apply it, rather, companies too can apply it.

However, the funds must come from a credit institution. It is not applicable when the funds come from family members, friends, or private persons.

How should I understand the final line of the article which says: “except when the refusal is related to negligence by the buyer”?

We understand that, given the effort to protect the buyer, this interpretation has to be restrictive, and “negligence” should be understood as those cases in which the buyer has not taken the necessary steps to obtain the mortgage (e.g., has not sent the documents required by the credit institution, etc.).

What would happen if this provision were added to the contract and the buyer finally does not obtain the funds?

The buyer recovers any monies he/she has paid (including deposits), but in turn he/she must leave the seller “in the same situation said seller would have been if the first contract were not terminated”

As you will have realized, this rule is quite wide in scope and rather flexible when it comes to a contract. It is therefore highly recommendable to seek counsel before signing a sale/purchase contract with deposits involved.