EDITOR’S NOTE: What do you do if your tenants stop paying the rent? Lawyer Raymundo Larraín Nesbitt gives a sweeping legal overview on evicting tenants in Spain, emphasising the pro-landlord change of trend in recent court rulings and legislation.
By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of June 2014
Tenancy laws have been traditionally pro-tenant for historical reasons that sink its roots in the aftermath of Spain’s post-civil war. The enduring seven-year ‘recession’ has altered the traditional status quo and has – finally – turned the tide in favor of landlords. About time too!
Spanish judges are increasingly ruling more and more pro-landlord. More significantly, the introduction of new game-changing laws, such as Law 4/2013 of Measures to Increase the Flexibility and Foster the Rental Market described further below, have supplied the legal tools with which to bolster the defense of landlord’s interests.
It has finally dawned on the Government, and society at large, that steps needed to be taken to ensure and protect landlord’s interests so as to foster a dynamic letting’s market. As I have extensively covered in previous articles over the last decade, Spain’s rental market is chronically sluggish in stark contrast to fellow European countries which boast a booming mature letting market for all the right reasons (i.e. The United Kingdom). I like quoting the statistic that only 17% of Spain’s properties are rented as opposed to the European Union’s 30% on average. This figure clearly shows better than any other Spain’s national obsession with property ownership ranking only second to football; and frankly I’m not entirely sure on the latter.
Landlords are understandably reluctant to rent out properties in fear of Spain’s clumsy and protracted eviction laws that place tenants at the heart of their interests neglecting the former. This may have been amply justified fifty years ago when tenants were indeed the weak link in a torn society coming to terms with itself after a crude civil war, but this doesn’t hold up a candle in today’s world.
Make no mistake, landlords are the weak link when it comes to rental in Spain; they are by a long shot the ones needing all the legal protection they can muster in today’s deceptive world. Non-paying tenants cause severe consequences to landlords which may even lead to a bank repossession as many are reliant on the rental to cover the mortgage instalments.
Broadly speaking landlord protection can be achieved twofold; both privately and publicly.
Privately, it requires the landlord to proactively adopt a series of measures to bolster and reassert his rights. This is covered in the below section “Renting in Spain Successfully”.
Publicly, it requires a concerted effort from all government institutions and factual powers to make it happen. This is covered in the below section “Tenancy Legal Framework”.
A lawyer can help a landlord on both counts.
A. Renting in Spain Successfully
Without going into detail a landlord may adopt the following measures, abetted by a lawyer, to pre-empt letting problems (chiefly non-paying tenants):
- Tenant vetting. Prospective candidates ought to be carefully screened to weed out unsuitable profiles. Haphazard screening can only spell future problems
- Arbitrage Clause
- Rental Insurance
- Rental Bank Guarantee
- Lodging the Tenancy Agreement at the Land Registry
The above-listed tips are already elaborated in detail in a specific article I wrote on the matter: Letting in Spain: The Safe Way. On pro-actively following these simple pointers, dictated mainly by common sense, a landlord ensures himself a sharp increase in the chances of successfully renting out his property hassle-free.
B. Tenancy Legal Framework
Urban Rental laws compromise a general backbone, constituted by Law 29/1994 or LAU for short, which in turn is constantly being fleshed out by newer laws. These new stream of laws introduce significant nuances to the point of changing the rules of engagement.
1. Law 29/1994, of 24th November
Spain’s Tenancy Act, or LAU, lays out the general legal framework for all rental contracts in Spain drafted after the first of January 1995. This law sets out the legal obligations for both landlord and tenant. The law is skewed towards tenants but less so than the laws it superseded.
2. New Laws
The Government has finally smelled the coffee and has been busy enacting batch after batch of new laws to bolster and uphold landlord’s rights since the ‘recession’ began in 2008. The initial set of laws proved reasonably ineffective in practice as they constituted half-hearted attempts which barely dented the existing status quo. The Government probably thought optimistically it would be a short-lived recession and the changes were more of a cosmetic nature geared towards making the headlines and wooing a growing discontent electorate than attempting to make a real change. However as the recession persistently endured over time, biting deeper into society’s core, it soon became evident that more decisive laws were required. And so newer laws proved to be more adept at streamlining eviction proceedings; resolutely addressing key issues which had traditionally held back fast proceedings. On average a tenant eviction is still taking three to nine months depending on how clogged a law court is.
The change in trend is evident, both from a technical point of view as well as by the unprecedented interest shown in the defense of landlord’s interests. The Government seeks in the protection of landlords a means to an end. By protecting landlords it seeks to foster a healthy rental market. The underlying logic is to gently nudge undecided property owners sitting on the fence and make them feel safer so they will be increasingly tempted to take a dip and become landlords.
The huge demand for housing (at an affordable price), besides a chronically sluggish rental market, goes a long way to explain the Government’s newfound interest in passing new laws that boldly attempt to address the matter for the first time by – ironically – protecting landlords as they hold the key (excuse the pun) to kick-start a more robust rental market. Although Spain currently has an oversupply of property it is not priced correctly to meet the huge latent demand for both rental and acquisition.
Examples of such new national laws are:
- Law 19/2009 of Measures to Foster and Streamline Rental Proceedings
- Law 37/2011 of Measures to Expedite Eviction Proceedings (so-called “Express Eviction Law”)
- Law 4/2013 of Measures to Increase the Flexibility and Foster the Rental Market
The last bullet point, Law 4/2013, epitomises like none other the change in trend on how landlord’s problems are perceived by public institutions. This landmark law was purposefully devised and enacted to counter Spain’s chronically languishing rental market enabling the means to help it become dynamic in line with other more mature fellow European countries’. It introduces a bevy of legal novelties all of which can be read in detail in my article New Measures to Bolster Spain’s Ailing Rental Market, from the 30th of June 2013. Only time will tell if it achieved, or not, its self-declared goal.
New legislation, both national and regional, is increasingly becoming more proficient at tackling the real issues at hand that traditionally plagued landlords (i.e. protracted eviction proceedings). These have held back for far too long the development of a more mature rental market in Spain. This new wave of laws is setting the benchmark by making renting altogether safer, for both residents and non-residents alike, paving the way for a more vigorous and healthy letting market.
Landlord’s Not-To-Do List
Disgruntled landlords should at no time attempt to follow any of the below in Spain least the want to be remanded into custody and be the subject of criminal proceedings instigated by their own tenants. Besides, on following the below a landlord substantially weakens his own legal position in the event of an eviction procedure.
1. Shut-off utilities (water & electricity). Landlords often feel the urge of doing this on their tenant falling in arrears. Your tenant can report you to the police on shutting off the utilities. This may be labelled as either coercion or harassment or both. Your tenant can prosecute you criminally on doing this. So you may want to think twice before doing it. If the utilities are in the name of the landlord, and he stops paying them on purpose to mount pressure on a non-paying tenant, he can equally be prosecuted as it’s legally equated to the physical shut-off of utilities. The landlord will be forced to pay for all the expenses associated to reconnecting his property to the utility service (several hundred pounds) as well as paying the belated invoices and delay interests. For all the reasons outlined, this is not a recommended option. Moreover, it may expose a landlord to be included in a Debtor’s List (“Fichero de Morosos”).
2. Changing the locks or locking a tenant out. Same as above, it may be regarded as either coercion or harassment or both and you may be prosecuted for this.
3. Non-sanctioned tenant eviction. Landlords may feel tempted to take justice into their own hands and break-in their own property assisted by a square-jawed six-foot acquaintance as back-up. This is seldom a bright idea and may land you and your ‘friend’ in a Spanish jail for unlawful entry (trespassing). The only – legal – way to evict a non-paying tenant is to hire a lawyer and initiate a formal eviction procedure through a Spanish law court. New laws have been enacted to help speed up the eviction procedure i.e. Express Eviction law.
4. Entering a property on a ‘routine’ inspection. Although it may be highly tempting to take a quick peak from time to time, especially after a noisy summer party that kept the whole neighbourhood up until the wee hours of the morning, it is hardly a good idea. Landlords often cannot stand the fact they are forbidden from accessing their own property in Spain if it’s not without the prior – written – permission of their tenant. You simply need their permission, following Spain’s Tenancy Act, regardless if they are up-to-date or not with their let.
5. Throwing tenants’ possessions away or threatening them. Self-explanatory.
Conclusion to Evicting Tenants in Spain
The tide has finally turned in favour of landlords. After having spent years criticising how reactive laws and public institutions were in general towards the growing problem of non-paying tenants (specifically post-credit-crunch) the trend is clearly changing now. Landmark reforms such as 2013’s law are resolutely paving the way to streamline eviction procedures. Judges are now more receptive towards landlord’s plights and are taking a clearer stance defending them. Let us hope this marks the inflection point from which a new, more robust, rental market emerges in Spain.
To close, a lawyer can support you twofold; by both assisting you to pre-empt most tenancy issues as well as to oversee a tenant eviction procedure.
Legal services Larraín Nesbitt Lawyers can offer you
- Rent-to-Buy in Spain: The Smart Choice – 8th of April 2011
- Renting in Spain: Top 10 Mistakes – 8th of June 2011
- Letting in Spain: The Safe Way – 8th of October 2012
- New Measures to Bolster Spain’s Ailing Rental Market – 8th of July 2013
- Bad Debtor’s List (“Fichero de Morosos”) – 8th of April 2014
- Spanish Creditors Pursuing Debts Abroad – 8th of May 2014
- Holiday Rental Laws in Spain – 8th of March 2015
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. Plagiarising, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.
2007 and 2014 © Raymundo Larraín Nesbitt. All rights reserved.