Spanish Leasing Contracts

Since the new urban leasing law (ley de arrendamientos urbanos) came into effect in January 1995, there has been plenty of time for the Jurisprudence to pass comment on the many interpretation problems which have arisen from this law since it came into effect. The new law was published with the intention of giving leasing contracts a better stability and in order to do so, it differentiates between those contracts which are subject to its rulings, and those which are not.

This law is not applicable to several different types of contract and, in the case of others -such as a season leasing contract- although it can be applied, it submits them firstly to the wishes of both parties. This would be the case of a lease contract drawn up for the summer rental of a property for holiday purposes, for example.

Nevertheless, contracts which establish the property they describe as the tenant’s fixed abode are considered house leasings and therefore have a minimum duration of five years. Any conditions which modify the rules included in the law - such as the minimum duration of the leasing- in a way which is detrimental to the tenant will be considered null and void.

One reader asked us whether he had the right to first refusal on a property which he was renting, in the event that the said property be put up for sale. The answer is yes, this new law does grant the tenant the right to first refusal if the owner of the leased property decides to sell. The tenant will be able to exercise this right within thirty days from when he/she is appropriately notified of the decision to sell, the price and the transaction conditions. The tenant maintains the said right if the property is sold to a third party without due notification by the owner, as in this event it is the purchaser who must inform the tenant of the fact that the property has been sold, of the price and of the conditions.

This right to first refusal has already been recognised by the Courts, even in cases of sale by public auction. Let us imagine that the owner of a property has taken out a mortgage, but fails to keep up with payment and the property is therefore auctioned off by the bank and bought by a third party. The tenant’s right has even been admitted in this sort of situation.

Nevertheless, this right does not exist when the property which is being leased is sold together with other domiciles or business premises owned by the lessor and which are all part of the same building, nor when several different owners sell a whole building made up of homes and/or business premises to one sole purchaser. In this case, when a whole building (block of flats) is sold to a third party, the tenants do not have the right to first refusal.

Sometimes, and for a number of different reasons, the lessors or owners try everything possible in order to evict an unwanted tenant. On occasions the solution applied is to refuse to accept payment of the rent and subsequently sue -and attempt to evict- the tenant precisely for not having paid. The question here is, what can one do if his/her landlord refuses to accept the money for the rent? This situation, when it occurs, is obviously worthy of severe criticism.

The law states that eviction due to non-payment of rent or any other costs for which the tenant is responsible can be avoided if at any time before the date for which the corresponding hearing has been scheduled, the tenant pays the lessor or leaves the necessary outstanding amounts at his/her disposal at the Court or at a Notary’s.

This said, the law obviously does not want to favour an individual who allegedly has failed to comply with his/her obligations and therefore only gives him/her one chance. In accordance with this, eviction cannot be avoided if the same situation has occurred before of if the lessor can adequately prove that payment was demanded at least four months before the suit was filed and that the tenant has not yet satisfied the amounts owed. In other words, if the tenant does not pay, he/she is given one chance to pay before the hearing or within four months of the lessor demanding (by telegram, through a Notary...) the money.

This is where this law’s interpretation problems arise, as if a person is sued in order for his/her eviction to be granted and then he/she pays at the hearing, this can be considered invalid due to the fact that payment is late, as it is not strictly carried out “before the hearing”. On other occasions, tenants believe that by paying the amount for which they are being sued, they will avoid being evicted, but this is not so. This is due to the fact that before the hearing the tenant must be able to prove that, as well as having satisfied the amount for which he/she is being sued, he/she has also paid the rent and any other costs he/she is responsible for up until the date of the hearing. For example, unfortunately, due to how slow the Courts work it is obvious that, sometimes, months elapse from when a suit is filed until when the hearing actually takes place.

The above mentioned procedure is not applicable to every type of eviction case; it is only applicable to those which are subject to the rulings of this new law, and which include the leasing of a property where professional, commercial or industrial activities are going to be carried out (the leasing of a property where a lawyer’s office or a surgery is going to be set up, for example). In this last case, the main differences are that there is no pre-determined minimum term for the leasing (as there is when leasing a property which is going to be used as the tenant’s fixed abode) and there are different tax regulations, as these kind of premises are subject to IVA, where as private homes are not.


This article has been reproduced in it's entirety courtesy of Fernando Aliaga, Legal & Fiscal Services, Javea.