Author: David García
What does the law establish?
The Law of Urban Leases regulates which will be the minimum duration of the contracts of rent of housing. Article 9 of the law states that the parties are free to agree on the term of the leases, but establishes a minimum duration during which the tenant may extend the lease on a mandatory basis.
Following the latest amendment to the Urban Leases Act in 2019, all contracts signed after 6 March 2019, if the agreed term is less than five years if the landlord is a natural person or less than seven years if the landlord is a legal entity, the tenant will have the right to have the contract extended up to this minimum duration.
At the tenant’s will, the tenant may remain in the dwelling for up to 5 years.
Article 9 of the Urban Lease Law
1. The duration of the lease shall be freely agreed by the parties. If this is less than five years, or less than seven years if the lessor is a legal entity, when the contract expires, it shall be compulsorily extended by annual instalments until the lease reaches a minimum duration of five years, or seven years if the lessor is a legal entity, unless the lessee declares to the lessor, at least thirty days prior to the date of termination of the contract or of any of the extensions, that he/she does not wish to renew it.
In the event that the duration of the contract is not specified in the contract, it will be understood to be concluded for one year, but the tenant will have the right to extend the contract for up to five years when the lessor is a natural person and up to seven years in the case of a legal person.
What if the owner needs the property for himself?
From the second year of the contract, the lessor who is a natural person will have the right to terminate the contract if he/she needs to occupy it for him/herself, his/her spouse or any of his/her first-degree relatives in the event of separation, divorce or marriage annulment, provided that there is a final judgement and this possibility is expressly provided for in the signed contract.
A rticle 9 of the Ley de Arrendamientos Urbanos (Urban Leases Law)
3. Once the first year of the duration of the contract has elapsed and provided that the lessor is a natural person, the compulsory extension of the contract shall not be applicable when, at the time of its conclusion, the need for the lessor to occupy the rented dwelling before five years have elapsed in order to use it as a permanent dwelling for himself or for his relatives in the first degree of consanguinity or by adoption or for his spouse in the event of a final judgement of separation, divorce or marriage annulment has been expressly stated in the contract.
In order to exercise this power to recover the property, the lessor must inform the lessee that he/she needs the rented property, specifying the cause or causes among those provided for in the previous paragraph, at least two months prior to the date on which the property is going to be needed and the lessee will be obliged to hand over the rented property within this period if the parties do not reach a different agreement.
When can the tenant withdraw from the lease?
Once the first six months of the contract have elapsed, the tenant can always withdraw freely by giving at least 30 days’ notice. If the contract has been agreed for a longer period than that actually completed, the tenant must compensate the landlord for a maximum of one month’s rent for each year of the contract that remains to be completed, provided that this has been specified in the signed contract.
From five years onwards, the lease is extended by annual instalments.
When five years have passed in a lease whose lessor is a natural person or seven years in the case of a legal entity, if neither of the parties notifies the other of their intention not to renew it, the contract will be automatically extended by annual instalments up to a maximum of three more years.
If the lessor does not wish to renew it, the lessee must give four months’ notice to the lessee and, in the event that it is the lessee who does not wish to renew it, the lessor must give notice at least two months before the expiry of the contract or any of its extensions.
Article 10 of the Ley de Arrendamientos Urbanos (Urban Leases Act)
1. If on the expiry date of the contract, or of any of its extensions, after at least five years have elapsed, or seven years if the lessor is a legal entity, neither of the parties has notified the other, at least four months prior to that date in the case of the lessor and at least two months prior to that date in the case of the lessee, the contract shall be compulsorily extended by annual instalments up to a maximum of three more years, unless the lessee declares to the lessor one month before the date of termination of any of the annual instalments that he does not wish to renew the contract.
2. The extended contract will continue to be subject to the legal and conventional regime to which it was subject.
What happens to the contract after eight years?
After the eighth year, if neither of the parties express their wish not to extend the contract, the contract is tacitly renewed, which means that the contract agreed between the parties remains in force, but instead of being governed by the Urban Leases Act, it is directly subject to the Civil Code.
Its duration will correspond to the type of rent that has been specified in the contract, so that, if it has been agreed on a monthly basis, it will be renewed month by month, and, if it is stipulated annually, it will be every year.
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