Welex, your law firm in Marbella has the pleasure to write a few lines on the modification of the Urban Lease Law in Spain
See below new rental rules in Spain!
In relation to the reforms established by Royal Decree-Law 7/19, of March 1, on urgent measures on housing and leasing, in relation to the modification of the urban leasing act, this new law comes to introduce important modifications about leasing of properties.
This Spanish law shows the need to guarantee more protection to the lessee, indicating a set of measures to make this law a viable alternative to the acquisition of properties.
In Chapter I of this Law, let’s have a closer look at the new provisions:
More protection for the lessee
With regard to the mandatory extension:
The mandatory extension for the lessor and optional for the lessee is now longer in case of leases for housing use than in the previous legislation that was then limited to 3 years. The Royal Decree introduces a distinction as well as an extension of the period of forced extension, establishing the extension of the lease at 5 years in the event of the lessor being a natural person, or 7 years in the event of the lessor being a legal person.
The Spanish legislative modification also takes on again the former second extensions, which operated in the urban leases law published on June 5, 2013, understanding that, if there is no prior notice at the end of the mandatory extensions, the annual extensions of up to a maximum of 3 more years will apply. In order for such extension not to take effect, it will be necessary to make a notice of 2 or 4 months before the end of the current period, depending on whether it is the lessee or the lessor who wishes to end the contract.
Once extensions periods are over and none of the parties has resolved the contract, the tacit renewal shall take place, only in case that it had not been explicitly excluded from the contract, under the terms of article 1566 that stipulates:
“If at the end of the contract, the lessee remains in the leased property for at least two weeks with acquiescence of the lessor, it is understood that there is tacit renewal for the time established in articles 1577 and 1581, unless there was a legal requirement.
With regard to the resolution of the lessor’s right in Spain
With regard to the previous legislation, the extinction of the lessor’s right meant the extinction of the lessee’s right, without prejudice to the provisions of article 34 of the mortgage law for the protection of the rights registered at the Property Registry.
However, this new rule has introduced the obligation that the rights of the lessee continue until the end of the term of the lease contract.
In line with the foregoing, there is no more possibility to terminate the contract in order to sell the property. The so-called “sales prevails rentals” of article 1571 of our civil code, which states
“The purchaser of a leased property in Spain has the right to terminate the lease in force when the sale is verified, unless otherwise agreed and as provided in the Mortgage Law.
If the purchasing party uses this right, the lessee may require that he be allowed to collect the fruits of the crop that corresponds to the current agricultural year and that the seller compensates him for the damages and losses.”
This provision, taken up again in the last modification of the urban leasing law, has been eliminated by the modification in the present Decree-Law, which includes the subrogation in the rights and obligations of lessor by the new acquirer.
Expenses that cannot be individualized
The lessor may charge expenses other than those that can be individualized by means of counting devices, based on the participation coefficient of the leased property. In this case, the legislator requires the amounts to be perfectly established in the contract. This requirement is not trivial since the legislator restricts the possibility that, during the period of forced extensions, these amounts are not updated.
It also includes the possibility of passing taxes related to housing onto the lessee. These amounts can be updated to match the tax rate at any time. It goes without saying, although the new rule does so, that this does not imply a modification of the taxpayer, who will continue to be the lessor, but who may not allege the aforementioned agreement to the tax authorities.
The legislator also mentions the possibility of an agreement on the expenses of the real estate agencies, indicating that these will be to the account of the lessor in any case, when it is a legal person.
Additional guarantees provided by this Spanish law
The new rule limits said guarantees to 2 months of rent, which may be carried out by a bank guarantee or deposit, except in the case of long-term leases.
As can be seen, the modifications established by this Royal Decree-Law have come to establish a framework of greater protection for the lessee, both in relation to the use and enjoyment of the leased property and in relation to the economic obligations of said legal act, limiting the disposition of the lessor who will be forced to look for alternatives to the applicability of the aforementioned rule for less onerous leases in its terms.
Do not hesitate to contact WeLex, your multilingual law firm in Marbella for any questions regarding your rental contract, whether you own a property in Spain that you want to rent out or you want to rent a property located in Spain!
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