It might seem obvious, but the first thing to be aware of is that rentals in Spain are legislated differently to the way they are regulated in other countries. Never assume that the way you rent your property and the contracts that you use in your country are valid in Spain. Over the last 25 years I have seen many clients who have problems because they thought or have been told that it is not necessary to consult a lawyer to rent their property in Spain. Often, agencies convince them that legal advice is unnecessary and that they offer all services more cheaply. What they do not say is that the choice of rental contract and the legislation which applies to it is a critical factor in being able to recover your property quickly in court if the tenant does not pay, or you need it for your own use, or want to sell.
As an example, in Spain if we give the keys of our property to a tenant and sign a year’s rental contract, the tenant can continue occupying the property for up to 3 years; Spanish law protects tenants with a legal extension, mandatory for owner and voluntary for the tenant, of up to three years (Art. 9 LAU), provided that both owner and tenant have designated the contract as a residential rental (contrato de arrendamiento de vivienda).
Following is an article of interest to this type of situation, from a specialist legal journal (SEPIN) which deals with this topic and develops some ideas to try to explain more clearly how to rent a property legally in Spain.
There are two types of rentals in Spain.
RENTAL FOR RESIDENTIAL USE (USO DE VIVIENDA)
OTHER USE (USO DISTINTO)
Let’s imagine we want to rent a property as a dwelling, it would be usual to offer it for long-term
rental. And so … What is meant by “housing” (vivienda)?
It must be a habitable property. It is not possible to designate any building as a home if it is not
fit for personal or family living, so it must meet the minimum conditions for that. For example, a
house without a bathroom would not qualify given what is now considered normal. It’s not possible to rent a simple shed or shack, however much a family or individuals might use it, because it would not pass the legal requirement of “habitable”.
This designation has nothing to do with the size of the rented property, which can be large or small, or even just a single room, provided that, as indicated above, it has the essential facilities.
The property must fulfill the permanent needs of a dwelling for a tenant.
To be explicit, it is the place where one lives, whether as family or individual, on a permanent basis, otherwise it would be designated as “temporary”. Any use of a dwelling, therefore, which does not have that purpose has to be be defined as “other use”. The tenant is not required to occupy it personally, but his/her spouse or children should at least.
In these cases one has to choose a residential contract carefully because despite what the contract might say, the minimum period required by law is three years unless the contract states that after an initial period (e.g. one year) the owner needs it for personal use.
Dwellings rented to companies?
We can consider how to define those contracts signed by companies or businesses for a manager
or employee to occupy a property as a residence. First, these contracts cannot be classified as “housing”, since the company does not itself have a “permanent need”, which a managing director or other employee would have as an individual, but only if they were renting directly as an individual. It is important to note that the protection enjoyed by residential rentals is based on satisfying the fundamental need of a private individual, and it would therefore not be logical to extend this protection to a legal entity which naturally can rent property, but for “other use”, even if that use is the abode of a director or employee. The picture is not so clear, however, when the rental of a home is specifically for a designated person’s use and occupation because then the company is a simple intermediary in the contract, even though directly responsible for the payment.
We consider that renting a property to a company is contrary to the designation of “housing”, asthe main concept for the special protection of Urban Letting Legislation (LAU), which clearlydefines the provision of the “permanent need of the tenant” is still missing, which can only applyto a specific private individual and not a business, which does not “dwell” even in its businessaddress.
Of itself, this does not pose a problem; indeed, on the contrary, it is likely to be better for bothparties to specify the duration of a contract, and who will be able to occupy the dwelling, the rent, increases, etc., with “different use” allowing the freedom of conventional clauses, which does not fully occur if the rental was designated as “housing”.
The arrangements of articles 43 to 46 of the 1964 law for furnished rentals have disappearedfrom new contracts drawn up after 1 January 1995. Under the new LAU, rental of the furniture is an accessory of the property, and therefore is treated the same as the main element. Can one then establish a rent for the property with a supplement for the furniture? The answer is no, though a system of compensation can be put in place for breakages or misuse, but always pursuant to the current urban letting law.
Rentals of storerooms, garages and other units
These are included with the main lease, that of the dwelling, as an “accessory”, with the samelegal treatment to all intents and purposes.
It is sometimes argued that the landlord defines these separately so that the storeroom, garage or
other unit is governed by the rules of “different use” or the Civil Code. This would be a futile-attempt at fraud; as long as they are in the same property, even as independent units, with-landlord and tenant agreement, they will be treated as the same property, otherwise it would-equate to leaving just one of the contracting parties to define the contract and this is not allowed-by the LAU. It is less clear if the storeroom or garage is in an adjacent property, because the none could argue that the contracts are different.
In a nutshell, a garage or storeroom must be complementary to the dwelling or must comply with the general provisions of the Civil Code for these rentals.
RENTALS FOR USE OTHER THAN HOUSING
This regulation defines rentals for “other use” as all those which do not fit within the narrow definition of “housing”, though they should obviously be a building but there is no requirement-that it should be “habitable”. The following provides a summary analysis of the main issues that-cause confusion.
To be classified as “temporary” a contract does not need to be the traditional summer or vacation rental, or even of a particular length. It comprises any rental which is not intended to provide a “permanent” dwelling, so it can even be used by a family or by individual for a home, but where their residence is of a short duration for temporary work, a stopover, etc.
This category is equally applied to all rentals where the property is occupied for a defined-temporary and not permanently Residential contracts are habitually designated as “other use” by shortening the legal term of-three years to a single year or so, but this type of contract will not hold up in Court, and will be deemed fraudulent if it can be shown that the residence of the tenant was or is permanent and that the situation was known at the date of signing the contract. In such a situation, the contract’s clauses, especially those dealing with length of tenure, would be declared void.
According to the Law of Urban Letting, touristic rental is the temporary allocation of the use of an entire furnished and equipped property ready for immediate occupation to tourists (people who travel for pleasure or leisure to a resort for vacation), marketed or promoted in tourism channels (internet, press, radio) and carried out for financial gain (price list in the advertisement).
The definition of this type of contract does not depend on the length of the stay (a week, fortnight, days etc.). If the occupant of the property is a tourist and finds the property through-publicity material, then the rental is classified as a touristic rental, despite anything the contractmight say fraudulently about it being a temporary “other use” rental.
These contracts are governed by regional legislation and all autonomous communities have severe penalties for non-compliance with the requirement of obtaining licence and administrative permits to be able to offer this type of rental.
Before putting your property on an internet portal, you must first find out what the requirements are in the autonomous community in which you intend to rent to be able to advertise your property.
It is important not to confuse a contract for a local where a tenant is setting up his own business with one for an established enterprise, because this latter involves a series of elements – the business, the brand, the facilities, the clientele, etc. – of which the premises is just one, because what is being rented is “a unit with assets and its own life, where business activity can be started immediately or after administrative formalities”.
In these cases the law allows almost complete freedom for agreements, as a preferred source of applicable law.