I. VIVIENDA O TEMPORADA

These are the key words for a contract to be a soft or a strong renting contract. It is purpose and not number of months which matters.

There are rules of automatic contract extensions which are applicable when you rent a house as permanent dwelling (VIVIENDA). These automatic extensions are not applicable to temporary lettings (TEMPORADA).

VIVIENDA:  Automatic extensions for 5 years-3 years. STRONG CONTRACTTEMPORADA: NO automatic extensions. SOFT CONTRACTThe character is not depending on amount of months: a 11 months rental contract can be a permanent contract if its purpose is VIVIENDA.

A landlord can avoid the application of these successive extensions if at the moment of signing the contract, he expressly states that he needs the house for his own home use of the home use of first grade descendants ( included adopted ones) and ex-spouse.

If the house is not used as a home by the above preferent relatives within three months, the former tenant has rights to rent the house again and be compensated for attached inconveniences.

That´s why the purpose of the rental needs to be clearly agreed and written on the contract.

II: IS THE DEPOSIT CONTRACT OBLIGATORY?

When signing the contract and by legal imperative, the tenant needs to hand over to the landlord a cash rental deposit of one month’s rent in order to guarantee any damage caused in the property by the tenant. The damage needs to be proved as not being the consequence of the habitual use of the house.This cash will be given back to the tenant once the house is given back in perfect state after the renting period. If damages have been caused, the cost of the repair of these will be deducted from the deposit amount. This deposit cannot be used to pay rental installments. The deposit can be asked back if not given to the tenant after the letting, interests will be charged. The updating of the deposit amounts and rents can be done after the first five years of renting.III.RENT: HOW MUCH? HOW? WHERE? REVISIONS?

Rent is freely agreed by parties. Unless a different thing is accepted by the parties, the rent is paid in a monthly basis and must be done

within the first 7 days of each month. The landlord can never ask for advanced payments of more than one month.Rent payment can be done where and how the parties agree. If nothing is stated in the contract regarding this, the payment must be done in cash and at the rented house.  A receipt must be given to the tenant, unless the payment can be proved by a different means (i.e. Bank transference receipt).During the first 5 years of contract, the rent will be updated according to the Consumer Price Index (IPC) published by the National Institute for Statistics. After those first five years, the updating can be done in a different way, but generally this IPC index is used after the first 5-years period.The updated rent needs to be communicated to the tenant and will be obligatory one month after this communication.IV: RELATED EXPENSES. WHO PAYS FOR THEM?

General expenses derived from regular use of the house (community of owners’ fees, pool, elevators and garages, watchfulness services, etc.) needs to be paid by the landlord unless the parties agree on the contrary in the rental contract.

Expenses coming from individual services (water, gas, telephone, electricity…) need to be paid by the tenant unless the parties agree on the contrary. These expenses are also called “rent assimilated amounts”. 

V: WORKS IN THE HOUSETwo different kinds of works need to be differentiated: necessary or maintenance and improvements. 

A. Maintenance works The landlord needs to make all those repairs needed to maintain the house in habitable conditions unless the deterioration has been caused by the tenant, or the house has been destroyed by force majeure not chargeable to the tenant (fire, inundation, earthquake, etc.) and that causes the extinction of the contract. The landlord cannot increase the rents in these cases. 

Little reparations due to wear and tear caused by the ordinary use of the house must be paid by the tenant. If there are some needed repair works to be done in the house and they cannot postponed until the letting period finishes, the tenant will have to tolerate them; if the works last more than 20 days, the tenant will have a right to the decrease of the rent proportionally to the part of the house which is not habitable/usable due to the work.

 If there are works which are urgently needed in order to avoid serious and immediate damages, these can be carried out by the tenant, provided that is fully communicated to the landlord. The tenant will have a right for the reimbursement of the amount paid for these urgent works. If the maintenance works have been ordered by the competent Authority and they make the house inhabitable, the tenant can suspend or cancel the contract with no compensation.  The contract suspension means that both the renting period and the rent obligation are stopped until the end of the works. B. Improvement works.

Improvement works relate to hygiene, healthiness and comfort of the house and of the people who live in it. If these improvement works cannot be postponed until the end of the renting period, the tenant will have to tolerate them as the maintenance works. If they last for more than 20 days, the tenant will have a right for the reduction of the rent in a proportion equal to the part of the house which is not habitable due to the works.In these cases, the owner needs to notify the content, starting date, duration and costs of the works to the tenant 3 months before the start of them.  Once notified, the tenant can cancel the contract in one month’s time, unless the works scarcely affect the house. If the tenant wants to cancel, the cancellation will take place within the next two months. Works cannot be started until these two months pass.

If the tenant wants to bear the works, he will be entitled to a reduction of the rent in an amount proportionate to the part of the house which becomes inhabitable due to the works, and is also entitled to compensation due to the expenses derived as a consequence of the works. The tenant cannot operate without the landlord’s consent (expressed in written), those works which modify the configuration of the house and its accessories, or which produce less stability or safety in the house. In both cases, the landlord can ask the tenant to put the house back to its original state. 

Finally, the handicapped tenant can make all the necessary works to fit the house to his/her special needs or those of the spouse or relatives living with him/her. After the rent period, if that is required

by the landlord, they need to replace the house to its original state.  If the landlord makes improvement works in the house (once the 5 years of contract validity passes) he will be entitled to the increase of the rent unless parties agree on the contrary. The increase cannot be higher to the 20% of the rent.  

VI: SALE OF A RENTED HOUSE. PRE-EMPTION AND BUYOUT RIGHTS. 

If the owner of a rented house wants to sell it he must offer the sale to the tenant first, indicating to him the price and the rest of the sale conditions. 

The tenant has a preferent buying right over the house: pre-emption, and will have 30 days to opt for the purchase. 

If the owner doesn’t make the offering to the tenant and sell the house on his own at a price lower to the communicated one, or break any of the requirements, the tenant can challenge the sale and buy the house under the same conditions this was sold to the third party. This is called buyout right and can be practiced by the tenant in 30 days time from he receives the notification of the sale of the house.

The agreement by which a tenant renounces the rights of pre-emption and buyout will be valid if the contract has been signed for a renting period over five years.

The tenant will not have the pre-emption and buyout rights if the rented house is sold together with the rest of houses/ premises owned by the landlord belonging to a same estate or if the common owners of a estate sell to the same buyer all the apartments and premises belonging to that estate.   

The buyer of a rented house acquires the same rights and obligations of the seller, therefore he is obliged to respect the conditions of the contract till it reaches 5 years of rental period; cancellation can be performed after this period.

VII. CANCELLATION OF RENTAL CONTRACTS.

First cancellation cause of a rental contract is the expiration of the rental period. 

It must be commented that, even when parties can freely establish the duration of the contract, if the agreement was for a period under 5 years, the tenant can stay at the house up to the 5 years period, without any possibility of valid opposition by the landlord. After this period, the landlord can communicate to the tenant on his

cancellation will. 

Secondly, both landlord and tenant can ask for the cancellation of the rental contract if they fail to meet their respective obligations. 

This way, landlord can cancel the rental contract if the tenant:  o Failed to pay the rent or the guarantee.o Subletted or assigned the house to a third party without the

consent of the landlord.o Caused intentional damages to the house or made works

without the consent of the owner.o Performed annoying, unhealthy, noxious, dangerous or illegal

activities in the house.o Stopped occupying the house as a first place of residence.The tenant can cancel the rental contract if the landlord:o Didn’t make the needed reparations to keep the house in the

appropriate habitability conditions.o Disrupted the tenant when using the house.

Finally, the rental contract can also be cancelled if the house is destroyed by causes beyond the control of the tenant (for instance, an earthquake) and because an official declaration of the house as a ruin done by the competent authority.VIII. SUBROGATION OF THE RENTAL CONTRACT

Subrogation is the change of one person for another one in the rental which implies the assumption in all the rights and obligations held by that. The substitution can be performed on tenants or on landlord’s rights. Subrogation on the landlord’s rights happens when the owner sells the rented house to a third party. In these cases, the buyer has to fully respect the clauses of the rental contract, which will be valid until the termination of the rental period.

Subrogation on the tenant’s rights happens in different cases:

1) By death of the tenant: this death does not imply the extinction of the rental contract as there are several people who can assume/subrogate it:o Spouse of tenant or union fact partner who was living with

the tenant at the moment of his death. Two years of proven live co-habitation is necessary in the case of union fact partners. (Co-habitation is proven through the Padrón Municipal (Official  Census Record of the town ) 

o Descendants under the parental rights and duties or under tutelage of the tenant or in the case of two years of proven con-habitation before the death of the tenant. 

o Ancestors, brothers and sisters of the tenant who had habitually lived with him during the last two years of his life.

o Those other people 65% or higher handicapped, who has a kinship as niece, nephews,  aunt or uncle of the tenant and have been living together during the last two years

The order of the list above is used to determine the best right, when there are more than one of the aforesaid people holding a right to the subrogation:  Parents over 70 years old have a priority over descendants. 

In some circumstances priority is for: 60% or higher handicapped, those with family responsibilities and finally the younger descendant, the older ancestor or the younger brother/sister.

If there is no one to subrogate the contract, it will be cancelled.

Cancellation will happen too if the death of the tenant and the identity of the subrogator are not communicated to the owner within 3 months from the death of the tenant.  2) By marriage separation, divorce or nullity. If the house was the matrimonial domicile and it is granted by the judge to the spouse who is not the tenant. Needs to be communicated to the landlord in two months time from the judicial decision.

IX: CESSION OF THE CONTRACT. SUBLET

Cession of the contract: is made by the landlord, it is the transmission of his rental rights and duties to a third party.Sublet is made by the tenant; it is the renting of part of the rented house. The subletting needs to be on part of the house and for same or less time and rent fee than those of the main rental contract

In both cases (cession or subletting), the landlord must agree in writing.

X: CLAIMS

Judicial actions on rentals have been recently reformed for an express eviction without any results. Our advice is always to submit these agreements to arbitration.

XI: LAESE AND ARBITRATION

taking into consideration the slowness and financial disadvantage of the judicial procedures for the landlord, it is highly recommended to resolve rental problems with the help of arbitration. By continuing

we highlight the advantages that this gives to both parties: landlords and tenants. 

The main advantage for the landlord is an efficient and speedy settlement of the failure to comply with the contract. The arbitration is a good alternative to the common justice, because if the dispute is between two or more parties a third neutral and impartial party known as arbitrator resolves the dispute and dictates a sentence which is obligatory. The average time to resolve such disputes is between 20 to 30 days. 

The main advantage for the tenant is reduced financial demand and requirements at the time of renting. It’s a flexible product that facilitates an access to rent for everybody. No bank guarantee is required.  

Written by: Maria de Castro