Purchase of a leased Property

The lease implies a temporary assignment of the use and enjoyment of the property but does not prevent its sale.

In the case of sale of a leased property, the new buyer must in any case respect the existing lease. The situations that arise from this sale will depend on when the lease was signed, as it depends on when it was formalized to determine the applicable law.



Depending on the regulations applicable to the lease, there are several legal situations:



1.- Lease subject to current LAU (Urban Leases Act)


If the lease is governed by the current Law on urban leases, the lessee has a preferential right of acquisition (trial and recapture) over the property on which his right falls. Unless he has expressly renounced it since it is renounceable.

For the registration of the public deed of sale in the Register, it is required that the document expressly state the seller’s statement that the property is free of leases, under penalty of falsification in a public document; Or, if leased, proof of having notified the sale decision and its conditions to the tenants.


Purchase of property with a lease for non-residential use.

In the purchase of property with a lease for non-residential use, the effects are different, depending on whether or not the lease is registered in the Property Registry:
a. If the lease is not registered, the lessee is protected by the Registry, so the acquirer is subrogated in the rights and obligations of the lessee-seller.
b. If the lease contract is not registered, it is the acquirer who is protected by the Registry, therefore no subrogation occurs in the rights and obligations of the lessee-seller.
Landlord and tenant may agree to the exclusion of the right of subrogation.



2.- Lease subject to LAU’64


In leases subject to LAU’64, the lease is not terminated by the sale of the property. The grounds for termination of the lease by the landlord are limited, and among them, the transmission of the property is not contemplated as a cause of resolution.
In addition, in dealing with forced extension, LAU1964 establishes that the lessee will have that right to an extension even when the property is transmitted to third parties, by means of purchase or by inheritance title.
The acquirer is subrogated to the rights and obligations of the lease.



3.-Lease subject to the Spanish Civil Code

In rural property leases, the buyer may terminate the agreement, unless such power has been excluded by agreement, or the lease is registered in the Land Registry.
In the case of a sale, the lease is not automatically extinguished, but the buyer has the right to terminate it. However, if there is a “retro” agreement (temporary power of the seller to repurchase the property), the buyer cannot resolve the lease until the term to exercise the right to “retro” has expired.
So that if the buyer does not express his will to terminate the contract, and with explicit acts expresses his intention that the lease will continue in force, he cannot then claim his resolution based on art.1571 of the Spanish Civil Code.