COVID CLAUSE IN RENTAL CONTRACTS

The pandemic we are still suffering has brought changes in all sectors, including property. So, faced with the fear of a new lockdown, some estate agents and landlords have not hesitated to include the new concept of a ‘COVID clause’ in their contracts.

The purpose of the clause is to enable the tenant to vacate the property, cancel the rental contract without penalty and stop paying the contracted monthly rent in the event of a new estado de alarma or general lockdown. The landlord, by contrast, will avoid having a property occupied without recompense, avoid potential legal proceedings (debt recovery, evictions, etc.), and will be able to regain possession of the property for other purposes, including a new contract.

In accordance with the principle of the parties’ freedom of choice as stipulated in article 1255 of the Civil Code (contracting parties may set agreements, clauses and conditions as appropriate providing that they are not contrary to law, morality or public order), judicial experts see no legal impediment to an owner and tenant reaching a valid agreement in accordance with Law 29/1994, of 24 November, on Urban Rentals (LAU) and thus reflect this agreement in their contract.

This clause may be of particular interest in rental contracts for commercial premises or offices and in student accommodation (due to their temporary nature), since if we are talking about “traditional” rentals, Article 11 of the LAU already provides tenants with the possibility of abandoning the contract once at least six months have passed and provided that the landlord is given at least thirty days notice.

Given the above, without apparent legal impediments, owners and tenants are already including in their rental contracts potential solutions to problems associated with any future confinement, with clauses included in an ANNEX to the contract, similar to the following:

COVID 19 CLAUSE MODEL

The owner acknowledges the tenant’s right to abandon this contract in the event of the suspension of the tenant’s attendance at work or statutory education is suspended as a result of COVID-19.

The suspension of attendance at work or statutory education must be ordered by the competent authority and be imperative and obligatory for the tenant.

The tenant must notify the owner that they are exercising their right to abandon the contract, as provided for in this specific section, and that such implementation is irrevocable. Exercising the right to abandon the contract obliges the tenant to vacate the rented property, with effect from the date that the property is returned to the owner.

Exercising the right to abandon a contract as a result of COVID-19 will not entitle the tenant to refund of any balance of monthly rent.

The tenant will compensate the landlord for the exercise of the right to abandon the contract due to COVID-19 with an amount equal to the deposit set in the rental contract, the same being attributed to the landlord.

Author: J. Escobedo

I am a member of the Tenerife Law Society since 1989 with a dedicated team for anyone who needs an immediate answer or long term solution to any practical or legal issues appertaining to any property or business investment in Spain. If you have decided to move to Spain to start a new life, whether that´s buying a property or a business, then you will definitely need the services of a good Spanish Lawyer who is fully conversant with Spanish protocol and who has a good command of the English language. I am based in the south of Tenerife and I am specialist in Property Law, Inheritance issues and taxes as well as Tenerife and Canarian law and a great deal more. ABOUT MY STAFF All my friendly and professional staff are fluent in English. We have been working for foreign clientes for over 30 years in Tenerife, providing legal advice and litigation services to all our clients investing throughout the whole of Spain and we pride ourselves on providing a high quality service to our clients in the form of clearer communication and advice.

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