Right of lease retraction

Two tenants had rented a property in San Bartolomé de Lanzarote since 2013. Years later, the property changed hands because the property was awarded in a judicial auction , and it was purchased by another person. In 2017, the tenants were notified of that change of landlord after the judicial sale.

The tenants decided to exercise an action known as “ tenant retraction ”: in short, to request recognition of their right to step into the buyer's shoes and keep the property, paying the same price (and under the legally stipulated conditions). They filed a lawsuit requesting that their right be declared and that the new owner sign the public deed in their favor.

The conflict focused on a very specific issue, whether for the court to admit the lawsuit it is mandatory to have deposited (judicially deposited) the auction price within the deadline, or if that deposit can be made later. Initially, the court dismissed the claim because it understood that the consignment had arrived late : the money, according to the court, was consigned out of time.

The Provincial Court overturned that decision and ruled in favor of the tenants as it considered that consigning the price is not a “procedural requirement” to be able to sue, but a substantive requirement to be able to complete the retraction, once there is a favorable judgment.

The owner appealed to the Supreme Court (TS), but this confirmed the criterion of the Court. The consignment of the price is not a condition for the claim to be admitted, but a substantive requirement linked to the retraction being made effective after a favorable judgment.