Seven illegal clauses in Spanish rental contracts

Lawyer Raymond Nesbitt explains the seven most common illicit clauses in Spanish lease agreements.

7 illegal clauses in Spanish rental contracts

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Abogados
8th of January 2018

Introduction

Following Spain’s ongoing two-digit rental property bubble, I thought it would be a good idea to write a brief recap of the seven most common blunders in rental agreements.

If you want to avoid stressful situations for you and your family, it is strongly advised you hire a law firm before you commit signing on the dotted line. Taking legal counsel ahead pre-empts most legal problems saving you money (and grievances) on the long run. This advice applies both to landlords and tenants. You can hire our legal service from €175 plus VAT: Rentals (contract drafting). Rental contracts in English also available.

Seven most common illegal clauses in Spanish lease agreements

1. 11-month rental contracts are watertight. Eleven-month contracts is a popular urban myth that somehow manages to perpetuate itself from one year to the next. Such contracts were designed to circumvent Spain’s Urban Tenancy Act (which deals with 12 months renewable contracts) and thus waive generous long-term tenant entitlements. 11-month contracts are void and when challenged at court, a judge will rule they are in fact a long-term contract subject to the LAU, meaning tenants can stay in a property for three years. If landlords wish to avoid the lenient tenant entitlements set by the LAU, they should be signing seasonal contracts instead which legally waive them. More details in my articles: Distinction between long-term and seasonal contracts – 21^st February 2018, Urban Rental Law in Spain – Spain’s Tenancy Act – 8th May 2016 and Seasonal lets: an alternative to holiday home rentals – 8th of October 2017.

2. Non-renewable 12-month rental contracts. A similar trick to point one above, is to word a long-term rental contract, which constitutes a permanent abode, as a non-renewable 12-month contract. Forbidding the extension avoids a tenant staying in a property for a number of years. Such a clause is null and void on being legally challenged. A tenant is allowed to stay in a property for up to three years at his sole choice (he can move out ahead if he pleases, providing six months have elapsed, see point three below). Only a tenant may choose whether to renew or not his rental agreement for a further 12 months. Spain’s tenancy laws are biased towards tenants for historical reasons outlined in my article Urban Rental Law in Spain – Spain’s Tenancy Act.

3. Cast-iron 12-month rental contract. Following on the above, another frequent clause is to word a contract as a 12-month contract, meaning a tenant cannot pull out of the rental contract ahead of the 12 months for whatever reason. This clause is also null and void following the amendment to Spain’s Urban Tenancy Act in June 2013. As explained above, a tenant may move out of a property ahead of the 12 months so long as 6 months have gone by. He must notify in advance his landlord of his intention of moving out but there is no need to justify a reason for it. The tenant however will have to pay a compensation to the landlord on breaking away for the outstanding duration of the long-term contract. So, there is a price to pay on bailing out ahead of time.

4.  Two months rental deposit. By law, a landlord can only request a one-month rental deposit from a tenant on rental agreements subject to the LAU (Spain’s Tenancy Act). Notwithstanding, additional guarantees may be requested but they are not labelled as a ‘deposit’ from a legal point of view. On the other hand, by law, landlords of seasonal contracts must request a minimum of a two-month rental deposit. Often both type of contracts are confused leading to mistakes. More details in my article: Urban Rental Law in Spain – Spain’s Tenancy Act – 8th May 2016.

5. Right of entry. Frequently, concerned landlords word into a tenancy agreement the right to visit the rented property giving only a short notice. This is in fact null and void. This error stems from a misconception, when a landlord rents a property, he loses possession of it until such a time the keys are returned. What this means is that a landlord is forbidden to enter (his own) property without the express written permission of his tenant. Should a landlord disregard this, he can be criminally prosecuted for illegal trespassing being remanded into custody. More details in my article: Renting in Spain: Top Ten Mistakes – 8th of June 2011.

6. The tenant is responsible for any damage to the (rented) property. Frequently, landlords word rental contracts in such a way that they make tenants responsible for any and all damages to the property. Such a clause is – you guessed it – null and void. Tenants are responsible of paying for the normal wear and tear. Landlords must pay for repairs and maintenance that allow the property to be apt for dwelling purposes as per art. 21 LAU.

7. In the event of a sale, the tenant must leave. Another common mistake is to word a rental contract in such a way that if the property is sold whilst it is being rented out as a permanent abode, the tenant must leave the property (with his family). This again is null and void. Although following the amendments to Spain’s Lease Act in 2013 there are legal reasons which allow a landlord to bypass the three-year rule and kick out his tenant ahead of time, a sale is not one of them. The new buyer will be forced to respect the outstanding tenancy agreement until it ends (the full three years) providing the tenancy agreement is lodged at the Land Registry. This may lead to complicated legal situations with multiple ramifications which exceed the purpose of this article. Legal advice should be taken.

Conclusion

Hiring a seasoned lawyer, in my experience, pays for itself on all the money you stand to save on avoiding the most common pitfalls on signing a rental agreement in Spain.

You should hire a lawyer from the onset, particularly if you are a foreigner in Spain, before you commit yourself signing on the dotted line of a tenancy agreement. All agreements should be put in writing and worded into the rental contract. Quite often these contracts are flawed or have clauses which are null and void as templates are frequently used which tend to perpetuate errors.

Unfortunately, practice tells me that most clients only come to us after they have signed and landed themselves in hot water. The legal fees they wanted to save themselves will now be threefold at least.

Bottom line, for your own good, hire a competent lawyer from the outset before you commit and sign a tenancy agreement or any other legal document for that matter. Trust me, you will save yourself money and aggravation on the long run.

“If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.” — Steve Jobs.

Steven Paul Jobs was an American entrepreneur, business magnate, inventor, and industrial designer. He was the chairman, chief executive officer (CEO), and co-founder of Apple Inc.

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Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, litigation, taxation, and inheritance. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 951 894 675 or by completing our contact form.

Article originally published at Larraín Nesbitt Lawyers: 7 illegal clauses in Spanish rental contracts.

Legal services Larraín Nesbitt Lawyers can offer you

• Rentals (contract drafting)
• Tenant Eviction Service
• Non-Resident Income Tax (Fiscal Representation)
• Holiday Rental Accounting Service (HRAS)
• Registration of Holiday Rental Homes
• NIE Number (Tax Identification Number)

Rental-related articles

• Renting in Spain: Top Ten Mistakes – 8th of June 2011
• Let-to-Buy in Spain: The Smart Choice – 8th of April 2012
• Letting in Spain: The Safe Way – 10th of October 2012
• New Measures to Bolster Spain’s Ailing Rental Market – 8th of July 2013
• Tenant Eviction in Spain – 8th of June 2014
• Holiday Rental Laws in Spain – 8th of March 2015
• Holiday Rental Laws in Andalusia (Decree 28/2016) – 8th of February 2016
• Decree 20/2002: Andalusia’s Holiday Rural Rental Decree – 8th of April 2016
• Urban Rental Law in Spain – Spain’s Tenancy Act – 8th May 2016
• Buying Property in Spain – 10 Reasons to Hire a Lawyer – 8th November 2016
• Renting in Spain – Landlord’s Taxation – 8th of January 2017
• Renting in Spain: Non-Resident Landlord’s Rental Tax Relief – 14th of January 2017
• Community of Owners in Madrid to ban Holiday Rentals – 29th of June 2017
• Holiday Home Taxation in Spain – 8th of July 2017
• How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
• Holiday Rentals in Andalusia Made Easy – 3rd July 2017
• Holiday-home lettings: Do NOT register with Andalusia’s Tourism Registry unless you are fully compliant – 21st of July 2017
• New Balearics Holiday Rental Law – 8th of September 2017
• Seasonal lets: an alternative to holiday home rentals – 8th of October 2017
• Let-to-buy contracts: do not forget to add a clause forbidding sublets! – 20th October 2017
• The magic of lettings in Spain – 21st November 2017
• 7 illegal clauses in Spanish rental contracts – 8th January 2018

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

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