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1.1.
Legal Provisions

Legal provisions on renting and letting business premises in Spain are
contained in the new Law of Urban Lettings (Ley de Arrendamientos Urbanos) of 1994,
which applies to rental contracts made after January 1, 1995. Contracts settled before
that date shall be governed by several rules, which have been modified by the current law
of urban lettings.


Although the afore-mentioned Spanish law allows agreements
settled between landlord and tenant stating the parties’ rights and
obligations, however, it is always advisable that tenant and landlord state
the rental conditions in a written contract.


The following provisions shall be contained in a rental contract:

• Details of landlord and tenant.


• Description of the property.


• The contract term.


• Amount of rent and payment terms.


• Any other legal provisions that the parties
  agree.

Rental contract may be made before a notary and recorded at the Spanish
Property  Registry (Registro de la Propiedad).


These are only general guidelines and not definitive statements of the law,   
all questions about the law’s applications to individual cases shall be
directed  to a Spanish Lawyer.


1.2.
The contract time period


Both parties agree the term for which the property will be rented. When the   
contract duration is not provided, this will run for 1 year.


If at the end of the period stated in the contract, none of the parties
notice  each other their intention to terminate their
contract, this will be renewed annually up to the moment that
one of the parties decides to terminate it.


2.
The rent


The parties shall agree the amount of rent and have it set forth in
detail on the written rental contract.


Unless otherwise is agreed, rent is monthly paid 7 days
before the end of the month. On no account must the landlord ask for more
than 1 month rent to be paid in advance.


The manner of payment is that stated in the contract, where
it is not provided, payment shall be made in cash at the premises.


Upon receiving the monthly rent, the landlord must give you a
receipt for each payment, unless it is accredited by other means; e.g.
proof  of payment through bank transfer. Make sure you get these receipts or
any proof of payment as these constitute an implicit contract.


During the first 5 years, rent will be increased or
reduced according  to the consumer price (inflation) index
(Índice de precios al Consumo – IPC), after that period, rent will
increase according to what both parties agree upon  signing the contract.


3.
The deposit


A security deposit (fianza) is a deposit of money to the landlord to
ensure that rent will be paid and other responsibilities of the
agreement will be performed. The deposit shall be equal to 2 months’
rent.


This deposit cannot be used to pay the rent to the landlord.


This deposit will be returned as the tenant moves out,
assuming that the property is in good conditions.


The deposit may be updated according to the consumer price
index after 5 years of contract time period.


4.
Subletting the business premises.
Transferring the rental contract.


The tenant may sublet the premises or
transfer the rental contract to a third party
without landlord’s previous consent, the tenant shall notice
it to the owner within one month from the date of subletting or
transference.


In these cases the landlord may raise the rent 10% when
subletting part of the premises, or increase 20 % of the
amount when subletting all the premises or transferring the rental
contract.


Keep in mind that upon transfer of rental contract, the tenant
transfers all rights as well as obligations
to the transferee third party.


Notwithstanding you may be forbidden from subletting your
unit if this was previously agreed in your rental contract.


You should consult a Spanish Lawyer in order to avoid pitfalls


5.
Repairs in the premises


Usually it involves many problems to clarify who must make the repairs in the 
premises and pay them… Here you have a general guideline about repairs when   
renting/subletting business premises, this do not constitute definitive
statements of the law. Other problems may arise, and thus it is advisable
that you contract  the services of a Spanish Lawyer.


The landlord must make all necessary repairs to keep the
property in a fit condition to use it, however landlord is not responsible
for repairing damages caused by the tenant.


Tenant shall make those small repairs on account of the
property daily  use.


Urgent maintenance repairs may be undertaken by the tenant
in order to avoid serious and immediate damages in the property, these must
be made previous  notice to the landlord, repair costs will be returned to
tenant.


The landlord must give the tenant three-months notice of his intent to
undertake  repairs affecting to health and hygiene in the
property. In this case  tenant may renounce the rental contract
within 1 month from the notice. If the tenant decides to
stay he may get a reduced rental rate in relation to the part of the premises
that cannot be used because of the repairs. These repairs entitle the
landlord to increase the rent after 5 years of validity of   
the rental contract.


6.
Sale of the premises; the tenant’s right of pre-emption
If the landlord is willing to sell the occupied property
during the life of the rental contract, tenant has the right
of pre-emption (derecho    de tanteo), which means that he could buy
the property in priority to other purchaser.


Landlord must first offer the premises’ sale to tenant, who
will have 30 days to reply. If the landlord does not make
this offer, or the property is sold at a lower price than the offered one,
the tenant could, within one month following completion, have the sale
annulled and purchase the property, in such a case the purchase price will be
same than the sale annulled.


Pre-emption rights’ renunciation agreement will be valid
only for rental contracts that exceed 5 years time
period.


No pre-emption right can be applied when the rented house is   
sold together along with the rest of properties that form
part of the same building.


If you buy an occupied property, you acquire the rights and
obligations of the vendor, and therefore, not until 5-year validity
period of the rental contract has been completed, may the rental be
terminated.


These are only general guidelines and not definitive statements of the law,   
all questions about the law’s applications to individual cases shall be
directed to a Spanish lawyer.


7.
The tenant’s right to indemnity upon termination of the contract


If your landlord decides not renew your rental contract upon
termination of the 5-year period of validity, he must pay you the indemnity
that both of  you had previously agreed. In order to to dos, the landlord must
give prior notice of termination of the contract, at least 4 months before the
date of expiration of the term.


Normally rental contracts include a clause stating that tenant renounces  
to this indemnity.


8.
Landlord/tenant’s subrogation in favour of third parties


Either party to the rental contract may be substituted for another person,   
who will acquire all rights and obligations of the old tenant or landlord.

• The landlord may be substituted when he sells the rented
  premises        to a third party.


• The tenant may be substituted when he got divorced or died,
  in such a case his descendants or spouse could stay in the property up to
  the termination of the rental contract.

9.
Taxes


Landlord is liable to pay income    tax at a rate of 25%,
assuming that he is a non-resident whose Spanish property is being
rented.


You can deduct maintenance expenses from your Spanish income
tax.


10.
Having the rental contract terminated


 a) The landlord may rescind the rental contract when the
tenant:

• Neither pay the rent nor the deposit.


• Rent the premises to a third party without the landlord’s
  consent.


• Deliberately causes damages to the premises.


• Undertake repairs without landlords’ consent.


• Performs dangerous activities.

In any of these cases you need the services of a Spanish    Lawyer in order to obtain a court
order against the tenant.


b) The tenant may rescind
the contract when the landlord:

• Fails to make the necessary repairs to keep the property
  in a fit condition.


• Disturb the tenant’s premises’ use.

11.
Taking legal action before the Spanish courts


Many problems may arise when renting or letting business premises. You may   
disagree with your rental contract duration, the rent increase,
tenant  failing to pay the rent, etc.


Disputes regarding to rental are conducted through the ordinary procedure
(procedimiento civil ordinario) before a civil court.



12.
Getting legal help


Our lawyers provide solid legal advice regarding leases of property in Spain:




» Ask an English-speaking Spanish lawyer now.
 

Article by iAbogado Servicios Jurídicos SL (Madrid, Spain). Visit www.iAbogado.com for more original content  like this. Reprint permission granted with this footer included.