Doing business in Spain:
Section IV - Renting and letting business premises (1)
Renting and letting business premises in Spain
1. The rental contract
1.1. Legal Provisions
Legal provisions on renting and letting business premises in Spain are contained in the Law of Urban Lettings (Ley de Arrendamientos Urbanos) of 1994, which applies to rental contracts made after January 1, 1995. Contracts signed before such date arebe governed by other rules, which have been modified by the current law of urban lettings.
Although the afore-mentioned Spanish law allows agreements entered into between landlord and tenant stating the parties rights and obligations, however, it is always advisable that tenant and landlord state the rental conditions in a written contract.
The following provisions are to be contained in a rental contract:
- Details of landlord and tenant.
- Description of the property.
- The contract term.
- Amount of rent and payment terms.
- Any other legal provisions that the parties agree.
Rental contract may be made before a notary and recorded at the Spanish Property Registry (Registro de la Propiedad).
1.2. The contract time period
Both parties agree the term for which the property will be rented. When the contract duration is not provided, this will run for 1 year.
If at the end of the period stated in the contract, none of the parties notice each other their intention to terminate their contract, this will be renewed annually up to the moment that one of the parties decides to terminate it.
2. The rent
The parties shall agree the amount of rent and have it set forth in detail on the written rental contract.
Unless otherwise is agreed, rent is monthly paid 7 days before the end of the month. On no account must the landlord ask for more than 1 month rent to be paid in advance.
The manner of payment is that stated in the contract, where it is not provided, payment shall be made in cash at the premises.
Upon receiving the monthly rent, the landlord must provide the tenant with a receipt for each payment, unless it is proven by other means; e.g. proof of payment through bank transfer. Make sure you get these receipts or any proof of payment as these constitute an implicit contract.
During the first 5 years, rent will be increased or reduced according to the consumer price (inflation) index (índice de precios al Consumo – IPC); after such period, rent will increase according to what both parties agree upon signing the contract.
3. The deposit
A security deposit (fianza) is a deposit of money to the landlord to ensure that rent will be paid and other responsibilities of the agreement will be performed. The deposit shall be equal to 2 months rent.
This deposit cannot be used to pay the rent to the landlord.
Such deposit will be returned as the tenant moves out, assuming that the property is in good conditions.
The deposit may be updated according to the consumer price index after 5 years of contract time period.