The vendor may claim his rights in the event a buyer refuses or omits to pay the purchase price of a property, provided he gives the purchaser reasonable notice, making the time of the payment of the essence of the agreement and warning the purchaser in the event of non-compliance he will terminate the sale contract.
The fact there is a term in the contract for the payment of interest or additional interest in the event of default or giving the right to the vendor to file an action to receive the purchase price or any balance thereof does not prevent the vendor from exercising his right to terminate the agreement. After the termination of the sale contract, the vendor through an action is entitled to claim various remedies, such as a judgment that he lawfully terminated the agreement, an order for the deletion of the agreement from the Land Registry records, the balance of the purchase price due with interest, an order for the delivery and sale of the property in public auction or through a private agreement, as well as an order for the purchaser not to trespass in the property, plus means profits, interest and costs.
The issue of the lawful termination of a sale contract by the vendor was examined by the Supreme Court in a judgment issued on 2.5.2017 where the judgment of the Court of First Instance was appealed by the purchaser. One of the grounds of the appeal was that the term for the payment of the price ceased to be essential, giving the right to the vendor to terminate the agreement without any notice.
The Court of First Instance issued a judgment in favour of the vendor for the balance of the purchase price due, an order for the re-sale of the property, an order for unobstructed and vacant possession and for the purchaser not to commit any trespass in the property and to remove his personal belongings, as well as a declaration that the sale agreement was lawfully terminated by the vendor. The vendor claimed he had lawfully terminated the sale agreement through a letter of his lawyer due to the purchaser’s omission to pay instalments due.
The Supreme Court held that the judgment of the Court of First Instance was wrong and set it aside, stating that the payment of the instalments agreed between the parties in the sale contract was an essential term of the agreement and omission to comply with it gave the vendor the right to terminate the agreement. However, the court underlined that while the time for the payment of the various instalments was clearly stated in the agreement between the parties, it ceased to be essential due to the behaviour of both the purchaser who did not comply with the time of the payments and the vendor who did not insist in its strict compliance. It was possible for the vendor to make again the time for the payment of the instalments of the essence by sending a proper notice to the purchaser to fulfil his contractual obligations, but he did not do so. As a result, the vendor lost his right to terminate the sale agreement for the reasons stated in his lawyer’s letter. Therefore, the Supreme Court considered that the aforesaid termination letter was not valid and could not terminate the sale contract; consequently, it set aside the judgement of the Court of First Instance.