Judgment on the non-existence of res judicata and condition of sale consisting of the granting of subrogation of mortgage credit.
SENTENCE NUMBER 3/2005
In Jerez de la Frontera, January 12, 2015.
MR. MARIA CARIDAD MOREIRA LANSEROS, JUDGE OF THE JUDGE OF THE COURT OF FIRST INSTANCE No. 2 OF JEREZ and her party, having seen the present orders of ORDINARY JUDGMENT followed in this Court with the number 1. 432/2011, between parties, of one as plaintiff D/ª XXXXX XXXXX XXXXX with Attorney D/ª ANA ZUBIA MENDOZA and lawyer D/ª MARTIN DE LA HERRAN SABICK, and of another as defendant D/ª RENTAS Y VITALICIOS SL with Attorney D/ª SARA ALVAREZ-OSSORIO SANTIZO and lawyer D/ª ANTONIO GARCIA SAENZ,
FIRST: That the Attorney General, Ana Zubia Mendoza, in her representation, presented a document that this Court was in charge of the distribution of the lawsuit based on the facts contained in the complaint and, finally, begged the Court to admit the lawsuit and, after the appropriate legal procedures, to issue a sentence that included the motions for the plea. By decree dated February 16, 2012, the lawsuit was admitted and the defendant was summoned to appear in court within 20 days to answer the lawsuit. On April 2, 2012, Attorney Álvarez Ossorio appeared in the name and on behalf of the defendant, answering the lawsuit on the basis of the facts expressed in her response and alleging the legal grounds she deemed appropriate, and filing a counterclaim against Mr. XXXXX XXXXX XXXXX.
SECOND: By decree dated July 25, 2012, once the lack of filing of Form 696 had been corrected, the claim was deemed to have been answered in due time and form and on behalf of the above-mentioned attorney, and a counterclaim was filed, and it was agreed that the plaintiff would be notified within a period of twenty days in order to answer it. On January 31, 2013, the response to the counterclaim was filed, and the parties were convened for a hearing on June 18. On June 17, in accordance with Article 188.1 of the LEC, the hearing was suspended and was rescheduled for February 5, 2014. At the hearing held, since it was found that there was a defect in the way the counterclaim was proposed, and it was not possible to determine the claims of the counterclaim, the counterclaim was dismissed and the costs imposed on the counterclaimant. The parties did not reach an agreement, and the parties requested that the lawsuit be put to the test.
THIRD: That the trial was held on the day and hour indicated, with the result that works in the records, and once the proposed and admitted test was practiced, they were left on the table to dictate the present resolution.
FOURTH: That in the processing of this trial, the legal prescriptions and requirements have been observed and complied with, with the exception of the term to dictate the sentence due to the accumulation of work that weighs on this Court.
FIRST: The analysis of the allegations and evidence, especially the documentary evidence in the file and the examination of the witness during the trial, as well as the agreement shown by the parties during the preliminary hearing, form sufficient conviction in the Court regarding the following points:
1) That the plaintiff XXXXX XXXXX XXXXX and the defendant Rentas y Vitalicios SL signed a contract of sale on 3 December 2007, in respect of a property under construction with garage and storage room in the Urbanización El Encinar I development, Building 2, 5th floor, letter C, for the price of 189,000 euros plus VAT.
2) That the plaintiff buyer paid 38,691.20 euros as part of the agreed price.
3) That in the ninth clause of the contract the parties agree that in any case, the final operation will be subject to the Financial Entity that grants the mortgage loan, in accordance with the regulations in force, authorizing its subrogation. If the conditions required by the Financial Institution are not met, including providing additional guarantees or collateral that the Financial Institution deems appropriate, it may choose to terminate the buyer’s relationship with the real estate company or proceed to cancel the loan and constitute a new loan, these costs being borne by the buyer.
4) In October 2009, Mr. XXXXX XXXXX filed an ordinary lawsuit seeking a declaration that the purchase agreement contained a condition precedent, since the option to terminate the contract had been exercised by the buyer, and that the contract signed by the parties had been terminated, declaring that the seller was obliged to return the amounts paid on account to the buyer, and ordering the latter to pay the sum of 38,691.20 euros plus interest and costs. Once the proceedings had been processed at Court of First Instance Cuatro of this city, on 23-6-2010, the judgment was upheld, on the basis of which clause nine was classified as a real condition precedent, and based on various bank certificates (from September and October 2009 from Cajasol, CAM and BBVA, documents eighteen, nineteen and twenty of the demand) supporting the refusal of the loan requested, it is estimated that since the sale is conditioned on the actor being able to obtain the financing, it does not occur for reasons not attributable to it. This resolution clarifies that it is not relevant that a loan had been requested instead of subrogation in the one granted to the promoter. And it is on this point that the judgment handed down at second instance on 25-2-2011 disagrees, partially upholding the appeal lodged by the defendant and revoking the judgment handed down by the Court, rejecting the claim. The Court argued that “the clause whose application is sought expressly subordinates the performance of ‘the transaction’ to the financial institution that grants the mortgage loan “authorizing its subrogation” and establishes that if the conditions required by the financial institution are not met, the buyer may choose to terminate the relationship with the real estate company or cancel the loan and constitute a new one. In our opinion, in order to be able to terminate the buyer’s relationship with the real estate company, it is necessary for the buyer to prove that the financial institution did not authorize the subrogation of the loan, but in the present case the buyer has not even proved that he requested such subrogation. Instead, what he has provided is the rejection of a loan request by several banks, including BBVA, which is the same financial institution that had granted the defendant institution the mortgage loan in which the buyer could be subrogated. The buyer has dispensed with the fundamental fact that would have allowed the application of clause nine: that he had been denied subrogation in the mortgage loan”.
5) That after the ruling of the Provincial Court, the plaintiff purchaser requested BBVA to subrogate the mortgage loan, which was not authorised by the bank in accordance with the criteria for accepting risk and after analysing the economic documentation provided by the applicant. The documentation examined has been listed by the bank in an official letter sent to the Court: risk and default filters, CIR declaration Total indebtedness in the bank, and that provided by the applicant (ID card, report from the director of the INEM, payrolls for December 2010, January and February 2011, personal income tax for 2009 and 2010, deed of sale of fina 27914 of 15-7-2008, deed of sale of finca xxxxx dated 17-2-2005, contract of sale of the disputed property, receipts from other entities, employment contract of 10-9-2009, report of working life and list of movements in Cajasol’s account). And 6) That on May 23, 2011 the plaintiff sends a burofax to the defendant seller, requesting, based on clause nine of the contract and in view of the refusal of the subrogation by the financial entity, the termination of the contract with return of the amounts paid, duly received on May 30, 2011.
SECOND – The counterclaim deduced by the defendant entity in claiming damages caused by the plaintiff was not accepted at the hearing, and the plea of lis pendens raised in the reply was rejected, the litigious issue being limited to the claims deduced in the lawsuit. The plaintiff, supported by clause nine of the purchase agreement, and in view of the refusal by the financial institution to subrogate the mortgage loan, brings an action to have the contract terminated and the defendant ordered to pay back the amounts paid on account, with legal interest and costs.
The defendant seller, in her reply to the lawsuit, describes the ninth stipulation as a resolutory condition, not a suspensive one, and maintains that the plaintiff is obliged to prove the impossibility of obtaining financing for the purchase of the home, which she considers she does not do with the documentary evidence provided with the lawsuit, since it cannot be inferred that the defendant has been obliged to pay the costs.
The defendant seller, when answering the lawsuit, qualifies the ninth stipulation as a resolutory condition, not a suspensive one, and maintains that the plaintiff is obliged to prove the impossibility of obtaining financing for the purchase of the home, which she considers she does not do with the documentary evidence provided with the lawsuit, since the reality of the loan denial cannot be inferred with the necessary certainty, considering that we are rather dealing with the simple lapse of a banking offer for the concession of subrogation, caused by the indolence with which the necessary procedures were conducted or rather the reality manifested by the applicant when it came to fulfilling the necessary requirements for the concession of the same. It adds that it does not prove either the real capacity to pay for the repayment of the property, and it works in bad faith when it acquires a premises on 15 July 2008 by paying the required amounts without any problem. And even when in the ninth fact it affirms that in use of the faculty that attributes him the seventh clause of the contract, what it tries to demand the fulfillment of the contract, nevertheless it does not request it this way the formulation of the counterclaim, not acting to interest the granting of the writing and the payment of the pending price. And both in the fourth fact of the counterclaim and at the end of the eighth fact of its reply, it refers to the obligatory stay of execution of the contract urged to the contrary.
There is no doubt as to the nature of the suspensive condition of the ninth clause of the contract. This is so, on the one hand, given the terms in which it was drafted and the provisions of Articles 1.114 and following of the Civil Code, since the effectiveness of the contract of sale depends on the event that constitutes the condition, that is, the authorization by the financial entity that granted the mortgage loan of the subrogation of the same. This is because it is expressly agreed that the final operation will be subject to the financial entity authorising the subrogation, and if this is not granted, the buyer may choose to terminate the relationship with the real estate company or proceed to cancel the loan and set up a new one. And the fulfilment of this condition depends on the will of a third party, which is the bank that has to authorize the subrogation, not the debtor, in which case the conditional obligation would be void (article 1115). And, on the other hand, because several judgments of the Cadiz PA, Section 8 have been pronounced in this sense. Thus, in the judgment of 27 September 2012, which confirmed the judgment of the first instance declaring the existence of a suspensive condition, it states that “As regards the prior actions of the buyers, they do not constitute the object of this process, which is focused on resolving, as already expressed in the judgment on appeal, the action to terminate the contract of sale, exercised by the parties on the basis of the application of the suspensive condition provided for in clause nine of the contract”. Also the ruling of July 19, 2011 which states “This is precisely what has happened in this case, such refusal has been proven, evidence of this is that the appellant in the appeal does not fight such an argument but the lack of diligence of the respondent to obtain funding, presuming the bad faith that as we have indicated can not be presumed and what is proven is that he tried to obtain funding, not only subrogate in the loan as evidenced by the witness, but trying to obtain funding in the three entities where he had a current account; Therefore, it has been concluded that he has acted diligently and that clause nine should be applied since the condition to which the final operation was subject has not been met, i.e. that the Financial Institution that granted the mortgage loan, in accordance with the regulations in force, authorizes its subrogation”.
And in the same sense, the judgment of 13 July 2012 explains that “In the judgment appealed against, this clause is qualified as a ‘suspensive condition’ by which the sale would have been subordinated to the buyer being able to obtain financing to cover the part of the price pending, either by means of subrogation in the mortgage, or by obtaining another mortgage loan. We understand that the clause expressly subordinates the performance of ‘the operation’ to the financial entity that grants the mortgage loan “authorizes the subrogation of the same” and establishes that in the event that the conditions required by the financial entity are not met, the buyer may choose to terminate the relationship with the real estate company or cancel the loan and constitute a new one. In our opinion, in order to be able to resolve the buyer’s relationship with the real estate company, it is necessary for the buyer to accredit that the financial entity did not authorize the subrogation of the loan, but in the present case the buyer has not even accredited that he requested such subrogation, nor the denial of a loan request by various banking entities. The buyer has dispensed with the fundamental fact that would allow the application of clause nine: that subrogation in the mortgage loan had been denied’.
THIRD: The lack of authorisation by the financial entity of the request for subrogation of the actor in the mortgage loan is accredited with the documentary evidence in the proceedings. And it should be noted, as mentioned in the first reasoning, that the plaintiff had previously filed a lawsuit that was processed at the Court of First Instance of Jerez, in whose proceedings a ruling was issued declaring the sale contract terminated and condemning the defendant entity to the return of the sum already paid by the buyer as part of the price. The Court of First Instance held that the sale and purchase was conditional upon the actor being able to obtain financing to cover the part of the price outstanding, which was guaranteed by the mortgage on the property, as is clear from the wording of clause nine, and that this did not occur for reasons not attributable to the actor, as was clear from the bank certificates attesting to the refusal of the loans requested, or from the testimony given at the hearing. These certificates are those provided to this procedure in September and October 2009 by Cajasol, CAM and BBVA, documents eighteen, nineteen and twenty of the lawsuit, which deny the mortgage loan application deducted by the buyer. The ruling issued at first instance is revoked by the Court of Appeal on the understanding that the clause expressly subordinates the completion of the transaction to the financial institution that granted the mortgage loan authorizing its subrogation. However, the buyer had not even demonstrated that it had applied for such subrogation, but rather provided the rejection of a loan application by several banks, including BBVA, which is the same institution that had granted the mortgage loan to the defendant. However, the Hearing understands that there is a substantial difference between the economic circumstances to be taken into account when granting a loan and in the case of subrogation, explaining them.
Well, in the case now examined, a new fact arises since the plaintiff, after the ruling handed down at second instance in the previous lawsuit, in order to comply with the contract and obtain financing, requests BBVA to subrogate the mortgage loan, which is not authorized by the financial institution in accordance with the risk admission criteria and after analysis of the economic documentation provided by the applicant, as is shown by documents twenty-five and twenty-six of the lawsuit. Subsequently, having both parties in a trial period interested in the submission by the bank of the subrogation application file, BBVA sends the Court the risk and default filters, the CIR declaration of Total Debt in the Bank, and all the documentation provided by the applicant, part of which had been attached to the application: ID card, report from the director of the INEM, payslips for December 2010, January and February 2011, income tax for 2009 and 2010, deed of sale of fina 27914 dated 15-7-2008, deed of sale of finca XXXXX dated 17-2-2005, contract of sale of the disputed property, receipts from other entities, employment contract dated 10-9-2009, report on working life and list of movements in the account of Cajasol.
And in court, the witness Mr. XXXXX, BBVA’s representative who answered the notary’s request (document twenty-six of the lawsuit), explains that for the subrogation, salaries, charges and properties that he has, working life, if he is married or divorced, last income tax return and certificate of debts to other entities are requested, and these documents are sent to the person who has to study them, limiting himself to processing them but not to issuing a judgment.
And with the analyzed evidence, it is considered accredited that the financial entity that granted the mortgage loan to the defendant seller, has not authorized the subrogation of the buyer, not because of causes attributable to him or his negligence, but because of the risk admission criteria of the bank and after the analysis of the economic documentation provided by the applicant, which is all that required by the bank in view of the terms of the two BBVA certificates of March and May 2011 as well as the testimony of the witness.
And there is no evidence of bad faith on the part of the plaintiff in acquiring in July 2008, together with his brother, for half and in proindiviso, premises from EMUVIJESA, for the price of which the seller grants a letter of payment, and which, therefore, does not increase the charges of Mr. XXXXX XXXXX, constituting an asset of his estate. And it is acquired on the date on which the plaintiff was dealing with each of the twenty-three bills of exchange accepted in the contract of sale in dispute, without the defendant having proved that the purchase of the premises had a negative influence on the bank’s decision not to authorise subrogation, nor is any evidence to that effect produced. And it is known that bad faith is not presumed, and must be proven by the person alleging it. In this sense, what is outlined in the ruling of the AP of Cadiz of 27-9-2012, Section 8ª, is fully applicable to the allegedly prosecuted party when it states that “The appellant has limited itself throughout the process to expressing its suspicions about the lack of diligence of the buyers who did not provide the bank with the information required by it or did not comply with the formalities required, giving rise to and leading to the denial of subrogation in the mortgage loan. These allegations have not been subject to any evidence in this process. The appellant has limited itself to expressing them, without proposing or practicing any means of proof to prove them. The wording of document No 7 of the application does not allow the suspicions expressed by the appellant to be accepted or to be given credibility. It states that “once the mortgage subrogation study has been carried out … the conclusion is that the mortgage operation in question is not viable”. At no time does it mention that the applicants for subrogation did not provide the required documentation or failed to comply with any other formality required by the bank. It can only be concluded that the transaction proposed by the buyers was not viable. Therefore, given that the burden of proving the obstruction and impediment alleged by the defendant lies with itself, as established in Article 217.3 of the LEC, it is appropriate to attribute to the defendant, now an appellant, the negative consequences that derive from such lack of evidence”.
In the same line the already mentioned sentence of the same section of the AP of Cadiz of 19-7-2011, which states “That it must be stressed that in principle it is feasible that the economic situation has changed since the contract was concluded, since in fact he was paying all the amounts and it is illogical that they are paid when it is known that later it will not be possible to conclude the contract, in short what is proven is that for whatever reasons it has not been able to obtain funding. In general, when a contract is concluded, one is aware that it will entail obligations that must be fulfilled, which means that the obligation must be assumed with sufficient diligence and foresight to be sure that the contract can be changed, because although the current economic situation is evident, which has led to many economic problems, the problem is not attributable to the party who concluded the contract in the belief that it could be fulfilled.
Therefore, even though we are aware that economic problems are indeed possible, it is easy not to obtain financing, when it is possible to reveal even a worse situation than the one actually held from the economic point of view, and it is therefore relatively easy to avoid obtaining financing and thus to disengage from an obligation, leaving the performance of the contract to the discretion of one party, which is not admissible. For this reason it is necessary to be to each case in particular, as highlighted by the ruling issued by this chamber in the roll of appeal 317/10 dated February twenty-fifth, two thousand and eleven. which did not give rise to the resolution sought by the buyer for not obtaining the loan, with the contract containing the same clause as the ninth clause that binds the one in question,…
That in the resolution of the aforementioned roll, reference is also made to the sentence handed down in that proceeding 99/09 of the Court of First Instance number 5 of Jerez de la Frontera (ordinary trial 1,817/2008) in which the same contractual clause was applied, logically with respect to another similar contract, but with a fundamental difference, since in that case it was expressly declared as proven that the financial entity had denied subrogation in the mortgage loan.
This is precisely what has happened in the present case, such refusal has been proven, proof of which is that the appellant in the appeal does not fight such an argument but rather the lack of diligence of the appellee to obtain the financing, presuming the bad faith that, as we have already pointed out, cannot be presumed and what is proven is that he has tried to obtain the financing, not only by subrogating himself in the loan as is proven by the witness, but also by trying to obtain the financing in the three entities where he had a current account; Therefore, it has been concluded that if he has acted diligently and that clause nine should apply. .”
Therefore, having established in the case at issue the lack of authorisation of subrogation in the mortgage loan under the terms and for the reasons already set out, and in accordance with the ninth clause of the contract of sale binding on the parties, the contract must be declared terminated and the seller-defendant must reimburse the buyer the sum paid by him, which amounts to 38. 691.20, plus legal interest from the date of filing of the application in application of the provisions of articles 1100, 1101 and 1108 of the Civil Code, with the application being upheld in full.
FOURTH: In accordance with Article 394(1) of the LEC, the costs incurred must be borne by the defendant.
Having regard to the legal precepts cited and those of general and pertinent application to the case,
That, in view of the fact that I consider the action brought by Mr XXXXX XXXXX XXXXX against Rentas y Vitalicios SL to be the cause of these proceedings, I hereby declare that the contract of sale of 3 December 2007 signed by the parties has been terminated and that the defendant is ordered to pay the plaintiff the sum of thirty-eight thousand six hundred and ninety-one euros (38). 691.20), plus the legal interest accrued since the date of the judicial interpellation, and with express imposition to the same of the costs caused in this instance.
An appeal against this resolution may be lodged in writing with this Court within twenty days.
Thus, I hereby pronounce, command and sign my sentence.
PUBLICATION: The above decision was read and published by the undersigned Judge, who held a public hearing on the same day as this decision, which I hereby certify in Jerez.