The rental contract is a legal relationship of great importance, perhaps the most important, together with the purchase and sale, within the field of real estate law, given the need for housing and which covers a large part of the real estate operations that are carried out on a daily basis, given the difficulty of access to home ownership.
URBAN RENTAL CONTRACTS IN SPAIN
This involves, as is well known, the temporary cession of the use and enjoyment of a dwelling or premises in exchange for the payment of a rent.
The constitutional right to housing and the need to preserve the essential rights of families to be able to enjoy the secure use of a home, long ago led the public authorities to address this issue with regulations that ensured stability for families, as well as protection of their rights against abuses by landlords.
The unbalanced condition of one and the other has led to the creation of a protective regulation, and at the same time, a guarantor of the rights of one and the other in an attempt to seek a balance and justice in this legal relationship, which is so important for people.
This contractual figure is very detailed in its regulation, specifically in Law 29/1994 of 24 November, (which has been updated many times) on Urban Leases. Although the Legal Text does not have many articles, it is no less true that it summarises all the legal regulation of this contractual figure, which makes it very extensive in the casuistry that it contemplates, and in this article we are not going to give or offer comments on it, as this is beyond the limits of this article.
If you have any questions or disputes regarding urban leases, please do not hesitate to contact this law firm.
MOST IMPORTANT ASPECTS OF ITS LEGAL URBAN REGULATION IN SPAIN
Without prejudice to the aspects dealt with in the following sections, the following matters are covered:
1.- The Law regulates contracts for the rental of dwellings and other properties for use other than as dwellings, with seasonal contracts being explicitly included among them.
2.- The provisions of the Law are of an obligatory nature and therefore what is regulated by the parties must be adapted to the same, unless the parties expressly state otherwise.
3.- The agreements of the parties are binding as long as they are in accordance with the Law, although there are matters that the parties may provide for even if they do not comply with the provisions of the Law. See in this respect the possibility attributed to the lessee of waiving rights such as preferential acquisition, subletting, and more.
4.- The rent will be revised annually according to the index established in the Law, although this is not applicable if there is no explicit agreement between the parties. Some people who have consulted us have been perplexed when they realise that they cannot increase the rent as this possibility has not been included in the contract.
In this regard, there are nowadays time limitations to the increases that can be applied. See Law 12/23 of 24 May, for the right to housing.
5.- The possibility of subletting or assignment of the contract can be eliminated or restricted by the owner.
The rent is freely agreed by the parties, although it should be noted that the new Law 12/23 of 24 May, for the right to housing, has introduced some changes depending on whether the owner has more or fewer properties, and if the property is located in areas with higher rents, which are called pensioned areas.
7.- Although the Law allowed rents to be updated according to the CPI increase index, the new regulation has established certain limits: 2% for the year 2023.
limits: 2% for the year 2023, 3% for the year 2024 and will be fixed for 2025 in due course.
The payment of the rent is usually established on a monthly basis.
7.- The renter cannot carry out works without the consent of the owner, and those works carried out with authorisation that are incorporated into the property will remain as improvements to the same in favour of the owner; and we are referring to improvement works, never to conservation works that must be paid for by the owner.
DURATION OF THE RENTING
According to the law, the minimum legal duration is 5 years, unless the renter leaves the dwelling out of interest before this period.
In principle, it can be agreed for a shorter period, but in these cases the renter, if he wishes, can extend the contract up to the minimum of 5 years as we have said, but in this case he must take into account what we say below about refusal of extension.
Sometimes we have come across contracts of 9 months with the pretence of being seasonal contracts, and this is not the case because seasonal contracts are limited to 3 or 4 months, so in these cases we would be dealing with an ordinary rental contract and subject to the aforementioned legal duration.
Once the maximum duration period has expired, the parties may explicitly extend the contract, either by establishing new terms or a new extension, or tacitly by one year if the contract has not been denounced on the expiry date.
EXCEPTIONS TO THE LEGAL DURATION PROVISION IN SPAIN
It is usual for landlords to establish that in periods of extension, the renter’s right to the extension will not come into effect if the landlord needs the dwelling for himself or for certain family members.
It is subject to the need for 2 months’ prior notice and to a control by the renter, since within a period of 3 months if he has not occupied the property; and in this case, the renter who has vacated the property will have a period of 30 days to be reinstated in the use and enjoyment of the property, or else be compensated with an amount equivalent to one month’s rent.
This is a modification that was incorporated a few years ago to the Law on Urban Leases. Its application has been very controversial and has given rise to quite a lot of conflict because it has been used spuriously by many landlords who have seen the door open to obtain an eviction of renters, knowing that there will be no harmful consequences for them.
The reality is that this is because the person who is forced to leave the property is not going to do so without having another contract that they have had to sign during the notice period, and in the event that they find out about the breach by the previous owner, it is not going to be very easy for them to return to the property and breach the new contract for another property that they have signed.
For this reason, we always say the same thing to those who ask us this question, and that is the need to reply to the notice requirement, demanding that the need for said use by the aforementioned family member be justified without any doubt, as this often dissuades the owner from using this abusive practice in fraud of the law.
Therefore, if this situation arises, you should not act mechanically, taking for granted the veracity of the landlord’s cause, and seek the advice of a professional lawyer who is an expert in these matters because his intervention can avoid many prejudices.
Once the renter has left the dwelling, it must be occupied for the first two months and the renter has the possibility of claiming, if this does not occur, either by requesting reincorporation into possession or by claiming compensation equivalent to 1 month per year pending expiry.
THE RENTER’S OBLIGATION TO PAY THE RENT
The main obligation of the renter is the payment of the rent, so that non-fulfilment of this obligation entails the action for termination of the contract by means of eviction, the purpose of which is the eviction of the renter.
The Law assimilates the concept of rent to others such as payments for electricity supply, water consumption, etc., so that non-payment of rent will also lead to this consequence.
In relation to the exercise of the eviction action, the Law allows the renter the right to enervate or weaken or reduce the eviction action to nothing if the landlord has not previously requested payment with the effect of releasing the renter from the enervation.
The law tries to protect the landlord, but does not want hasty and damaging consequences, so that for one time only it allows the renter not to proceed with the eviction if he pays at the time of the summons to answer the lawsuit, or at the first amicable collection action made by the landlord.
CAN THE RENTER STOP PAYING?
The Courts and Tribunals are very clear on this point, so that the general rule is that it is not possible to stop paying, alleging non-compliance by the landlord.
This does not occur as in reciprocal obligations, where it is not possible to allege non-compliance on the part of the party in breach, and on the understanding that the renter being in the use and possession of the property would be fulfilling the main obligation of the owner, so it would make no sense to allege contractual non-compliance susceptible to such drastic conduct on the part of the renter as non-payment.
This circumstance must be taken into account, our advice is not to stop paying, because only with the non-payment of one monthly payment you could be claimed for eviction.
OBLIGATIONS OF THE LANDLORD AND CONSEQUENCES OF NON-COMPLIANCE IN SPAIN
In case of default by the landlord, the renter must claim against the landlord if a solution cannot be found amicably.
Renters often complain that the landlord neglects the property and does not attend to requests for repairs, and if this happens, they should not think of resisting the payment of rent because, as we said above, the landlord’s main obligation is the possession of the property, and this is fulfilled in the contract without the failure to attend to expenses being a main obligation, as is the renter’s obligation to pay rent.
THE PROBLEMATIC WITH THE DEPOSIT AND ITS RETURN
The reality is that although the law establishes that the security deposit is to be deposited in the official establishment provided for this purpose, it is normal that nothing is included in the contracts on this matter and this is what happens when the owner demands the security deposit at the same time as the payment of the first monthly instalment, committing to its return at the end of the tenancy.
The reality is that this is rarely the case and is usually a point of conflict, and such returns are rarely amicable.
What we always advise is that before leaving the property, a date should be agreed with the property or the agency for the return of the keys, and a date on which the parties should meet to examine the state of the property, agree on the possible defects as well as a quantification of the same.
In the contracts, according to the Law, the purpose of the Deposit is to guarantee the compensation of damages in the property, and that is why many times the owners are reluctant to return the money and put obstacles to its return.
In our long experience, we have seen it all and our conclusion is that if you do not proceed as we have indicated, the deposit money will not be recovered because we are always talking about amounts that do not invite you to go to a lawyer and pay the cost of the claim.
The best thing to do, knowing that it is a thorny issue, is to reach an agreement when the keys are handed over.
You should, therefore, try to do everything possible to agree on a simultaneous return of the keys and the return of the deposit with an agreement on the condition of the house.
What cannot be avoided is that if there are outstanding bills, a certain amount will be withheld, but this does not usually pose a problem if the excess is reimbursed in due course after justification of payment of the bills.
EVICTION, AS THE MOST FREQUENT LEGAL PROCEDURE IN SPAIN
Undoubtedly the most frequent legal action is that of eviction for non-payment, for which, as reiterated Jurisprudence recognises, repeated delay in non-payment or the simple fact of non-payment of a monthly payment will be sufficient.
You should know that the Law recognises the possibility for the renter who has been summoned or sued for the first time for eviction due to non-payment, who will have the possibility of preserving the action by paying the summons. This possibility will no longer be recognised if the claim is not initial.
Finally, it should be pointed out that in the event of non-payment of rent, an eviction can be filed without any claim for the rent owed, or with a claim for the rent owed; the difference being that if the claim is accumulated with both claims, the defendant has the possibility of alleging any type of cause of defence in relation to the amount owed; this is not the case if what is claimed is only the eviction, in which case, unless the debtor proves the payment of the rent, the eviction will automatically proceed to the eviction.
This law firm, depending on the solvency or ability to pay of the renter, recommends one course of action or another.
This eviction procedure has undergone procedural reforms over time, aimed at speeding up the procedures to obtain satisfaction for the landlord in the shortest possible time, always safeguarding the renter’s rights.
It is not the purpose of this article to deal with this legal procedure, which will be dealt with in another article, we have only wanted to refer to it due to its practical importance and the large number of legal cases it involves.
Other legal proceedings derived from the Urban Leases Law which are also relatively frequent and which we handle in this law firm are: eviction due to uncontrolled works; claims for undue rent increases or for increases claimed by the property, etcetera.
The regulation of other procedures which are not derived from the Urban Leases Law and which are of great importance and virtuality, such as, for example, eviction for precariousness and eviction against squatters, should be left out.
Both legal proceedings have been the subject of study and comments on our website and we refer you to them.
Carlos Baño Law Firm
We do not want to finish this article without mentioning that in our Law Firm we have a great experience in the drafting of contracts as well as in going to Court in matters arising from the application of the Law of Urban Leases.
