Late Payment and Article 1504: Where Spain's Supreme Court Draws the Point of No Return (2026 Ruling)

Short answer

If your Spanish purchase contract contains an express termination clause, the seller can terminate for a missed instalment without proving that the breach was serious. And once the seller has served the article 1504 notice, paying afterwards no longer saves the contract. However, anything the seller collects *after* termination is an undue payment and must be returned. That is the ruling in Supreme Court judgment 1307/2026 of 23 July 2026 (ECLI:ES:TS:2026:3386).

1. The case: EUR 740,000 and one EUR 20,000 instalment

In November 2017, two private individuals sold their home in Majadahonda (Madrid) for 740,000 € to a professional property company that intended to resell it. The price was deferred: an initial payment, a retention to clear a tax authority charge over the property, four instalments of 20,000 € due on 15 January, March, May and July 2018, and the balance at completion before the notary, with a long-stop date of 15 November 2018.

Clause three decided the case. If the buyer failed to meet its payment obligations, the contract would be automatically terminated following the article 1504 notice; the sellers would recover ownership and possession and keep the sums already received as an agreed penalty. The contract also allowed the notice to be served by any reliable means, including *burofax* (Spain's certified-content registered letter).

| Date | Event | Legal significance |
|---|---|---|
| 7 Nov 2017 | Private contract signed with express termination and penalty clauses | The parties define which breaches terminate the contract (art. 1255 CC) |
| Jan – May 2018 | First three instalments paid on time | Prior good performance does not prevent later termination |
| 15 Jul 2018 | Fourth instalment of 20,000 € not paid | A breach expressly classified as a termination event |
| 30 Jul 2018 | Sellers serve burofax terminating the contract | Point of no return: the article 1504 notice |
| 2 Aug 2018 | Buyer replies rejecting the termination | Unilateral objection does not revive the contract |
| 7 Aug 2018 | Buyer transfers the 20,000 € (23 days late) | Payment *after* the notice: no cure — and an undue payment |
| Aug – Nov 2018 | Sellers confirm termination and offer to return the 20,000 € — but never do | Foundation for the *actos propios* doctrine (art. 7.1 CC) |

The lower courts split: the Madrid Court of First Instance no. 19 sided with the buyer, holding that a 23-day delay over 2.7 % of the price was not a serious breach under article 1124. The Madrid Court of Appeal (Section 8) reversed and upheld the termination.

2. Two different regimes: article 1124 vs article 1504

• Article 1124 CC — the implied right to terminate reciprocal obligations. Case law requires a breach serious enough to frustrate the economic purpose of the contract. This is the default regime, applied when there is no specific clause.
• Article 1504 CC — the special rule for sales of real property: even where the parties have stipulated automatic termination for non-payment, the buyer may still pay after the deadline has passed, so long as no judicial or notarial demand has been served. Once served, no court may grant a further period.
• Article 1255 CC — freedom of contract: the parties may themselves define which breaches trigger termination.

The question the Supreme Court answers is whether an express termination clause must *also* clear the seriousness threshold of article 1124. It does not.

3. The doctrine: what was agreed takes effect exactly as agreed

The Court dismissed the buyer's first two grounds of appeal and confirmed settled doctrine — collected in judgment 261/2021 of 6 May, among others — that article 1255 allows contracting parties to classify particular breaches as grounds for termination irrespective of whether they would objectively be considered serious under article 1124.