Abusive Clauses in Contracts

What to look out for when buying or selling a New-built Property

One of our duties here at SGM Abogados is the review of purchase and sale contracts prior to signing, for our clients buying new built Properties. The contracts are normally prepared by the selling companies and many of them include the so-called “abusive clauses”, which are aimed to favour one of the parties (the selling company) to the detriment of the other party (buyer).

This post aims to provide information on abusive clauses in order to make them more easily identifiable when signing a contract for the purchase of a new-built property.

Section 81.2 of the General Law for the Defence of Consumers and Users provides a definition of ABUSE CLAUSES as: “Any stipulations not individually negotiated and any practices not expressly consented to which, contrary to the requirements of good faith, cause, to the detriment of the consumer, a significant imbalance in the rights and obligations of the consumer.”

According to our experience in working with these types of contracts, we have identified the most common abusive clauses on purchase and sale contracts, which are devoted to:

Imposing on the buyer the payment of own costs that the seller must assume in order to comply with his obligations, for example the costs of the declaration of new construction Title Deeds, possible cancellation of Mortgages costs, or the payment of the municipal tax known as plusvalia.
Establishing undetermined deadlines for the delivery of the property. Some contracts set long delivery deadlines (e.g. the first quarter of 2023), or grant themselves extensions of several months to avoid compensation on the part of the seller party for late delivery.
Changing the agreed property, Price. Any clause which allows the developer to increase the final price without objective reasons and without giving the consumer the right to terminate the contract is considered unfair, without giving the purchaser the right to terminate the contract if the final price is much higher than the one initially established.
Imposing of disproportionate consequences in the event of non-performance of the contract by the consumer. We refer to those clauses which provide that, in the event of termination of the contract by default on the part of the purchaser, the seller may retain for himself by way of penalty, the 100% of the sums paid on account of the property Price. This is considered abusive.
Renouncing or limiting the purchaser´s rights, for example the right of choice of the notary or those clauses that are aimed to renounce to the constitution of guarantees or credit policies from the seller to guarantee the amounts paid on account of property Price. These clauses would be abusive and considered null and void as they contravene a legal requirement, that was impose by the Law 57/1968, of 27 July 1968, on the receipt of sums advanced in the construction and construction of new buildings.