Tenancy agreements are often signed with invalid clauses that alternate the rights of the tenants
The latest rental reform, which came into force on 5 March 2019, has partially revised the Urban Leases Act (LAU). However, rental contracts are still often signed with invalid clauses that violate tenants’ rights.
1.- Minimum duration of the rental contract
With the outbreak of the Covid-19 epidemic, many holiday home owners have decided to rent out their properties as long-term rentals. Some contracts require the tenant to vacate the flat after a few months or a year, or pretend to be a seasonal lease, although the destination is the tenant’s permanent residence.
If the duration of the lease of the flat is less than the legal minimum term, then the tenant can continue to rent the flat because it is a null and void clause that does not comply with the legal term.
According to the current law, the time limit is in principle determined by both parties. However, there are some differences between the two:
*Contracts of less than 5 years: Contracts of less than 5 years (individual) or 7 years (legal entity), if the tenant is willing, regardless of whether the landlord is willing, will be compulsorily extended. Thus, contracts with a duration of less than 5 years can be extended to 5 years, 7 if the landlord is a company.
*Rental contract with an indefinite term: In a rental contract for a flat with an indefinite term, this will be considered to be 1 year. In the same way, the same rule of annual extension is applied until reaching 5 years. After this time, if there is no decision to cancel the contract by either of the two parties, an extension of up to a maximum of three years can be made.
2. Early termination by the tenant
If rental contracts are signed, in which it is established that the tenant must stay in the flat for at least 1 year, but the LAU allows the tenant to cancel the rental after the first 6 months of the contract have elapsed. A clause that imposes on the tenant the duty to give the landlord more than 30 days’ notice before leaving the flat is also null and void.
In the event that the tenant abandons the contract before 6 months have elapsed, a penalty may be agreed which will consist of compensation to the landlord of one month’s rent for each year of the contract that has not yet been fulfilled and the proportional part of one month’s rent for periods of less than one year of the contract. Any compensation that may be imposed on the tenant in the contract for a higher amount shall be null and void.
3. Updating of income
The contract must establish the updating of the rents, which may not exceed the increase resulting from applying the percentage variation experienced by the CPI. Any update agreed for a higher amount will be null and void. Furthermore, if the contract does not provide for the updating of the rent, then it cannot be updated by the lessor.
4.- Legal security and additional guarantees
The security deposit required from the tenant of a habitual residence is 1 month’s rent, which means that a higher security deposit cannot be required and this deposit is not subject to any type of update. However, the landlord may demand that the security deposit be increased when the contract is extended after the minimum term has expired. Or the tenant may request that it be reduced to one month’s rent.
The LAU does contemplate other legal guarantees, although they may not exceed the amount equivalent to 2 monthly payments of rent, unless the duration of the agreed rental contract is longer than 5 or 7 years (in the case that the landlord is a company). In this case, the landlord may demand guarantees from the tenant for a higher amount than the aforementioned legal maximum.