The rental contract is the text that establishes the conditions of transfer and use of a property, as well as the rights and responsibilities of both the owner (lessor) and the tenant (lessee). To ensure its legality, it is necessary to draft it according to the guidelines established by the Urban Leases Law (LAU) and the recent Housing Law, approved a week ago.

Duration and Extension of a Lease Agreement

Generally, it is common to agree a lease for a period of one year, with the possibility of renewal for a maximum of 5 or 7 years. Even if shorter periods are agreed, the lessee has the right to extend it for a term of up to 5 years if it is a lease to an individual, or up to 7 years if it is a lease to a company or corporation.

2. Protection in Case of Sale of the Home

In situations where the property is sold while occupied by a tenant, the tenant's right to remain in the property for the duration of his contract (either for 5 or 7 years) is safeguarded. This implies that, despite the change of ownership, the tenant has the legal right to maintain his residence in the property.

Irregular Situations in the Duration of a Lease Contract

Sometimes, certain landlords suggest the formalization of eleven-month contracts in order to present them as temporary rentals and thus avoid the obligation to extend the term. The Organization of Consumers and Users (OCU) points out that, if the property is used as a habitual residence, regardless of what the contract may indicate, the Urban Leases Law (LAU) applies and its extension is possible.

4. Extinction of the Housing Lease Agreement

There is a possibility for the landlord to repossess the property after the first year of the lease if he can demonstrate the need for the property for himself or for an immediate family member of the first degree of consanguinity. Previously, this exception was often used as an excuse to terminate leases prematurely. However, it will now only be valid if it has been expressly specified in the initial contract.

As for the tenant, current legislation recognizes the tenant's right to terminate the lease after the first six months. If the tenant wishes to terminate the contract before the established date, at least two months' notice is required.

5. Bond and Deposit in a Lease Agreement

At the time of signing a lease contract, it is common to deliver a deposit equivalent to one month's rent, together with a maximum of two additional monthly payments as an additional guarantee. This amount deposited, according to the recommendation of the Organization of Consumers and Users (OCU), is intended to ensure the payment of the rent, the associated expenses and the proper maintenance of the condition of the property.

6. Updating the Rental Price based on the CPI

The annual update of the rental price is a fundamental aspect in every lease contract. With the recent Housing Law, a change is established in the way this update is carried out, no longer using the Consumer Price Index (CPI) that has been used until now. In its place, a new specific index for renting will be implemented.

From 2023, prices may be updated up to a maximum of 2%, while in 2024 this figure will rise to 3%. As of 2025, a new reference index will be established that will be more stable and below the CPI, thus ensuring greater stability in rental prices.

7. Inclusion of a Detailed Inventory in the Contract

The refund of the deposit is made once the absence of outstanding debts and the good condition of the property is verified, although sometimes it can cause problems. Some tenants choose not to pay the last month's rent using the security deposit as compensation, even though this practice is illegal. On the other hand, landlords may encounter damages that exceed the amount of the security deposit.

To avoid inconveniences, it is recommended that a detailed inventory of the property be included in the contract, including photographs. Upon return of the keys, both parties should inspect the property and sign a document indicating any damage caused, if any.

8. Agency Fee Liability

According to Article 20(1) of the recent Housing Law, real estate management fees and costs associated with the formalization of the contract will be the responsibility of the lessor. In other words, this new legislation establishes that the payment of real estate agency fees falls on the owner of the property.

9. Abusive Clauses in the Lease Agreement

Although the parties may agree on specific clauses, these cannot override the mandatory rights established by the legislation in force. For example, it is not possible to prevent the extension of the contract up to a maximum of five years, nor to demand a withdrawal payment that exceeds the limit established by law.

10. Rental Contract Models

Although a rental contract can be drafted in a personalized way between the parties, as long as it complies with the legal requirements, it is useful to have a basic model to ensure that important aspects are not omitted. The Organization of Consumers and Users (OCU) offers a free downloadable rental agreement template, which includes a sample inventory. This can serve as a guide and reference when drawing up the contract.

Source: Fotocasa

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