The process of buying a property in Mallorca.

Find here the necessary steps to buy your new property in Mallorca.
Before reading on, let me tell you that I will be happy to help you in the process of buying your new property in Mallorca.

I am part of a team specialising in foreign investment, transfer of properties, NIE number application, tax advice, verification of charges and liens on property and legal estatus of the properties on the market.

Steps to take to get your new property in Mallorca

1.- Choose the property you are going to buy.

Rustic or urban. Big town or small village. With only 3.640 sq Km Mallorca has so many possibilities and despite the fact in one hour driving o will be able to cross the island from not to the other side, the location of your new property, will determinate your way of live there.

TIP NUMBER 1. Don’t be in a hurry. Surely the seller or Real Estate Agent will assure you that there is another person interested in acquiring the same property. They will want you to believe that either you buy it immediately, or you lose the house of your dream.
Don’t play that game and don’t sign any papers until you’re 100% sure it’s the property of your dreams.

2. Be sure the property it’s legal

Although it may be hard to believe, in Mallorca you can buy a property by signing the deed before the Public Notary, you can register it in the Land Registry and Cadastre and still be an illegal property.
Don’t let the seller or the Real Estate Agent (which works for the seller) guarantee you the legality. In the event that everything is not all right, the seller will not tell you and if the seller wants to hide something from you he will also hide it from the real estate agency.

3.- Be sure property it’s free of charges and encumbrances.

Legality isn’t the only thing you need to worry about. The property you are going to buy must be free of debts such as mortgages, pending payments to the community of owners, urbanization payments or other debts that may encumber the property.
On the other hand it is necessary to verify that it is up to date in the payment of rates and taxes.

TIP NUMBER 2. Hire a Lawyer. A Real Estate specialist. Being sure you buy what you are looking for (and not what vendor what to sell) will save you a lot of trouble on the future.

3.-Make an offer.

Once you’re sure you want it, make sure the seller knows you’ve decided on his/her property.
Your offer will be the starting point of the negotiation and it is very important that you define: the price, when you want to sign the deed and those things that are indispensable for your offer to continue standing. For example, make it clear that the offer is subject to the property being legal, being free of charges and being given the documentation that proves that it really is so.

4.- Draft the Option Contract.

The option contract is not mandatory, so this step can be skipped and go directly to the signing of the public deed.
Even so, in most cases an option contract is signed and a period, normally two months, is left between this and the signing of the purchase deed.
During this time the buyer can prepare the funds if he does not have them or manage a mortgage.
On the other hand, the seller will be able to prepare the required documentation, lift the charges and if necessary empty the property in order to deliver it to the new owner.

The clauses of this contract are binding on both parties and therefore it is important that all conditions of the future purchase are negotiated and included here.
The seller, when signing, pays the option premium which is normally 10% of the purchase price. As this contract is binding, it is a penalty for those who fail to comply with it. If the one who does not comply is the seller must return the duplicate option premium. That is double of 10%.
If the defaulting party is the buyer, the option premium will remain in the hands of the seller.
Both parties therefore risk the same.

TIP NUMBER 3. Leave a clause that allows you to terminate the Option Contract in the event that between the signing of the Option and the signing of the Purchase Deed you discover any illegality in the property.

5.-Sign the Purchase Deed

Purchase deed has to be signed in front of a Public Notary. Notary will make the deed in Spanish and will translate it to you.

6.- Pay taxes.

From the moment you sign the deed you have 30 days to pay taxes.

7.-Inscribe the property in the Land (Property) Registry.

It is not obligatory but highly recommended. The Land Registry is the one that protects you from third parties. It is public. No one can buy the property registered in your name without your consent.

8.- Inscribe yourself as a owner in Cadaster, Community of owners, and changes supplies.

9.- Pay anual taxes.

As a new owner you will pay Land Tax, Garbage Tax, Non Residents Tax (model 210) and in case your assets in Spain will be over 700.000 you will also pay Wealth Tax.

Tax Implications Of Buying Property In Mallorca (Majorca)

Before you make an offer to buy a property in Mallorca it’s advisable to make a tax plan, not only to know what you will pay when you buy a property but also to foresee the taxes you will pay in the future.

Taxes arising from the purchase of a property in Mallorca.

The taxes will depend on whether it is a new property or if it is used one.
If you buy a new property, or one that has been completely renovated, i.e. when the seller is a promoter you will pay 10% IVA, Value Added Tax on the day of purchase.
Subsequently, within 30 days of signing the deed of purchase, you must pay 1.2% of “Actos Jurídicos Documentados” Spanish Stamp Duty Tax.

On the other hand, if the seller is a private who sells a used property, you will pay the Transfer Tax “Impuesto de Transmisiones Patrimoniales, ITP“. This tax, which must be paid within 30 days of purchase, is progressive:

For the first step of 1 euro up to 400,000 euros 8% is paid.

For the second step of 400,001 euros up to 600,000 euros, you pay 9%.

For the third step from 600,001 euros to 1,000,000 euros you pay 10%.

And for the fourth step, which is all that exceeds one million euros, 11% is paid.

Annual taxes for the possession of a property in Majorca

.-IBI. “Impuesto de Bienes Inmuebles” This tax is paid annually to the Town Hall where the property is located.
.-Garbage Collection Rate. It is also collected by the Town Hall.
.-Incinerator Rate: Many municipalities collect it in conjunction with the garbage tax

Income Tax for non Residents

This tax (model 210) must be presented yearly, accruing on December 31st. You will liquidate the incomes of the property. i.e. rentals. But either if your are not renting it, you must present its annually and pay small amount depending of the value of the property.

.-Wealth tax

As non resident you are going to be liable for your Spanish assets only. Rate variates depending the region and in case of Balears Islands where Majorca is Wealth tax rates range from 0.28% up to 3.45% depending of the value of the assets.

Base payable from €Full payment (€)Remaining liquidable base up to €Tax rate (%)
00170.472,040,28
170.472.04477,32170.465,000,41
340.937,041.176,23340.932,710.69
681.869,753.528,67654.869,761,24
1.336.739,5111.649,061.390.739,491,79
2.727.479,0036.543,302.727.479,002,35
5.454.958,00100.639,065.454.957,992,90
10.909.951,99258.832,84From now on3,45

But not any non resident pays it. Wealth tax will be paid only when you assets are more than 700.000 euros. So, if your assets in Spain value 800.000 euros, you will pay wealth tax for 100.000 (800.000- 700.000).

If you become resident in Spain then you will be liable for all worldwide assets. Despite of this residents has a allowance of 700.000 euros + another one of 300.000 for the value of their permanent residence.


How much taxes do you pay when purchasing a property in Mallorca?

The answer is simple; Every purchase is different and to calculate it you need to know the details of the property.
The direct taxes that are paid when you purchase a house in Mallorca are progressive.
The indirect taxes that are paid annually for having a house in Mallorca, depend on the location and size of the property.

Also, Wealth tax has to be paid if your assets are more than 700.000 euros.

Would you like to get a fairly accurate calculation of the taxes you will be paying?
Send me now the sale price indicating also (if possible) the municipality or address.
You’ll receive the calculations in just a few hours.

mail: toni@palmalawyers.com

or

Whatsapp: +34678216706

This calculation is totally free and does not suppose any commitment on your part.

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.

This calculation will include:

Taxes when buying a Property in Mallorca

BRAND NEW PROPERTY

A) 4% VAT. These are properties built with government subsidies.

B) 10% VAT. Properties built by a property developer to be marketed as new homes.

C) 21% VAT. Commercial premises or commercial property with a residential part

—In top of this you have to pay another 1.2% Stamp Duty Tax—

SECOND HAND PROPERTY (USED ONE) . Those are any other different to previous ones.

In this case you have to pay Transmission Tax; “Impuesto de Transmisiones Patrimoniales, ITP“. This tax, which must be paid within 30 days of purchase, is progressive.

For the first step of 1 euro up to 400,000 euros 8% is paid.

For the second step of 400,001 euros up to 600,000 euros, you pay 9%.

For the third step from 600,001 euros to 1,000,000 euros you pay 10%.

And for the fourth step, which is all that exceeds one million euros, 11% is paid.

ALSO, YOU HAVE TO PAY YEARLY TAXES FOR HOLDING A PROPERTY IN MALLORCA

IBI ( Impuesto de Bienes Inmuebles)

Garbage Tax

Wealth tax. This one it’s also progressive and will depend on of ALL YOUR ASSETS IN SPAIN if you are non-resident. If you become tax resident in Spain then will depend on of ALL YOUR ASSETS WORLD WIDE.

Why don’t you try my skills for free?

Type me the price (and optionaly other details) of the property you are willing to buy and I’ll send you the breakdown of taxes and expenses.

toni@palmalawyers.com

Whatsapp: +34678216706

Anonymous complaints against urban illegality in Mallorca now are admitted.

The owners of illegal properties in Mallorca have a new enemy. Until recently it was necessary to identify oneself in order to denounce. From February 2019 anyone can file a complaint without identifying themselves.

That is why it is ESSENTIAL to make sure of the legality of the property you are going to buy before signing any document that commits you. (And don’t expect vendor or the agent paid by him/her will tell you the true).

As published in Ultima Hora newspaper in April 19th (read it here in local newspaper), the Consell (government of Mallorca) has received 46 anonymous complaints in two months for illegal works in rustic.

In just two months, the Agència de Defensa del Territori (ADT) has received 46 communications or anonymous denunciations for alleged illegal works. This figure contrasts with the one hundred formal complaints received throughout 2017.

The possibility of filing complaints with the ADT without the obligation to provide the name was introduced at the end of February. Previously, the Agency only admitted formal complaints, in which the complainant was obliged to provide his or her identity.

These 46 anonymous complaints were received between the end of February and last Friday. However, most of them, 26, were processed within the first two weeks of the service’s operation.

Priority

There are differences between formal and anonymous complaints. The former, in which the complainant is obliged by law to provide his or her name and surname and ID number, are processed “with priority” over the latter, which do not have the legal status of complaints. The ADT does not even refer to them as “complaints” but rather as “communications” that can be processed from its “Citizen Collaboration Portal”.

This website, which can be accessed from the ADT’s digital platform, contains a form in which the complainant is only asked for an e-mail address; the plot number, the industrial estate and the municipality in which the alleged infringement was committed, the type of construction erected without permission (if it is a house, an agricultural building, a swimming pool, etc.) and photographs of the irregularity.

Mercedes Garrido, insular consellera of Territori i Infraestructures and political responsible of the ADT, made a “positive” balance of the new service. “It must be borne in mind that the ADT is already competent in all the protected rustic land and in more than half of the municipalities of Mallorca. In this sense, citizen collaboration always comes in handy and helps the detection of infractions, since it is impossible to have enough inspectors to reach all sites.

On the other hand, Mercedes Garrido recalled that the Agència de Defensa del Territori de Mallorca was “the only agency of this type” that still did not offer the possibility of making anonymous complaints.

It must be remembered that the ADT only has jurisdiction in rustic land and, in certain circumstances, in urban land. Created in 2009, the Agency was virtually inactive until 2015, when the new government of the Consell de Mallorca amended its statutes and gave it more staff, among other actions, with the desire to boost its operation.

Buying property in Mallorca, costs, fees and taxes.

Costs

Mandatory costs.

Public Notary.

To be able to inscribe a property at you name on the Land (property) Registry you have to sign the purchase deed in front of a Public Notary. Notary it’s paid by the purchaser and cost will depend of the amount of the purchase but also of the pages of the deed. When you buy a property you add on the deed some documents as habitability certificate, efficiency energetic certificate and others. Cost may go from 500 to 2.000 euros

In some cases, for your security, the deposit of 10% to book the property has been done in the Notary bank account. In this case an acta of deposit has to be done. This acta may cost 200- 300 euros.

Land (property) Registry. Onces you had signed the purchase deed (and after paying taxes), the purchase has to be inscribe on the registry so you will appear as new owner. Cost of this inscription will be 200 to 400 euros.

Optional costs.

Surveyor /Architect:

In some cases to be sure if you will be able to develop /enlarge the property you need a report from an architect.

Valuation:

If you want to know the real price of the property (different to the market price) Survayor will make a report. This will cost form 400 to 3000 euros depending of the price of the property

Lawyer:

Despite it’s normal to hire a lawyer to check the legality of the property, prepare the deed and pay taxes, this is not mandatory. Chambers of lawyers of Balearic Island recommend a charge from 1 to 1,5% of the purchase price.

Taxes

Buying a property means pay taxes.

Taxes arising the purchase.

Will depend if you are buying a new property or a second hand own. Taxes will go from 8% to 11% for second hand property, and 10% for a new property + Stamp Dutty tax of 1.2% . Read here a post regarding taxes.

Also if you contact me I’ll calculate for free the taxes you are going to pay.

Taxes arising the ownership.

Once you became owner you will pay anual taxes

.-IBI. this is the land tax. From 150 to 4.500 depending of the value of the property.

.-Garbage tax. form 120 to 400

.-Incinerator tax. From 90 to 150.

.-Model 210 This model tax for the profit you get from your property. If you use it for yourself will be from 100 to 300 euros. If you rent it out will be 19% or 24% of the income depending if you are European Union Resident or Non EU Resident.

Supplies

Every month or two you will get an invoice for electricity and water. Gas, telephone and internet if you new property has this services.

If the apartment it’s integrated on a building you also have to pay the ordinaries and extraordinary expenses to maintain it.

The new version of the Spanish Urban Rental Law (2019)

Law 29/1994, of 24 November, on Urban Leases was last amended at the beginning of 2019.
This wording of the law has been in force since 6 March 2019.

IMPORTANT NOTICE: The text published on this website is for information purposes only. Only the Spanish version published in the official gazette is binding. Read it here

SPANISH URBAN RENTAL LAW 2019. Transitional provisions.

☞ go to the index

First. Contracts entered into on or after 9 May 1985.

  1. Residential leases entered into on or after 9 May 1985 and still in force on the date of entry into force of this law shall continue to be governed by the provisions of Article 9 of Royal Decree-Law 2/1985, of 30 April, on economic policy measures, and by the provisions of the tenancy agreement in the revised text of the Urban Leases Act, approved by Decree 4104/1964, of 24 December.

The provisions of paragraphs 2 and 3 of the second transitory provision shall apply to these contracts.

The tacit renewal provided for in article 1,566 of the Civil Code shall be for a period of three years, without prejudice to the power of non-renewal provided for in article 9 of this law. Renewed lease shall be governed by the provisions of this law for housing leases.

  1. Contracts for the lease of business premises entered into on or after 9 May 1985 and still in force on the date of entry into force of this law shall continue to be governed by the provisions of Article 9 of Royal Decree-Law 2/1985, of 30 April, and by the provisions of the revised text of the 1964 Urban Leases Act. In the case of tacit renewal in accordance with the provisions of Article 1,566 of the Civil Code, the renewed lease shall be governed by the provisions of this Act relating to leases for use other than housing.

The provisions of the foregoing paragraph shall apply to lease contracts assimilated to tenancy and business premises that were entered into on or after May 9, 1985 and that subsist on the date of entry into force of this law.

Judgment TS (Sala 1.º, de lo Civil) of 12 March 2015, Rec. 3101/2012, establishes the following jurisprudential doctrine: “Business premises lease contracts entered into before the entry into force of the Urban Leases Act of 1994 but entered into on or after 9 May 1985 and subject to forced extension are governed, as to their duration, by the third transitory provision of that Act.
Second dwelling leases entered into prior to 9 May 1985

A) Applicable normative regime.

  1. Residential leases entered into before 9 May 1985 and still in force on the date of entry into force of this Act shall continue to be governed by the rules relating to the tenancy agreement in the revised text of the 1964 Urban Leases Act, except for the modifications contained in the following sections of this transitory provision.
  2. The provisions of articles 12, 15 and 24 of this law shall be applicable to these contracts.
  3. The provisions of section 1 of article 24 of the consolidated text of the 1964 Urban Leases Act shall cease to be applicable.

The rights of pre-emption and retraction, regulated in Chapter VI of the consolidated text of the 1964 Urban Leases Act, shall not apply in cases of adjudication of housing as a consequence of the division of common property when the lease contracts have been granted after the constitution of the community over the thing, nor in cases of division and adjudication of common property, acquired by inheritance or legacy.
See second final provision, paragraph 2. of this Act which provides: “Paragraph 3 of the second transitory provision shall enter into force on the day following the publication of this law in the “Official State Gazette”.
B) Extinction and subrogation.

4.- As from the entry into force of this law, the subrogation referred to in article 58 of the consolidated text of the 1964 Urban Leases Act may only take place in favour of the spouse of the tenant who was not legally or de facto separated or, failing that, of the children who lived with him during the two years prior to his death; failing this, the ascendants of the tenant who were dependent on him and lived with him for at least three years prior to the date of his death may be subrogated; failing this, the ascendants of the tenant who lived with him at least three years prior to the date of his death may be subrogated.

The contract shall terminate upon the death of the subrogated person, unless the subrogated person was a child of the tenant not affected by a disability equal to or greater than 65 per cent, in which case it shall terminate after two years or on the date on which the subrogated person reaches the age of twenty-five, whichever is the later.

However, if the subrogated person is the spouse and at the time of his death there are children of the tenant living with him, there may be a subsequent subrogation. In this case, the contract will be terminated at the age of two or when the child reaches the age of twenty-five if this date is later, or due to his death if he is affected by the disability mentioned in the previous paragraph.

5.- Upon the death of the person who, in accordance with the provisions of articles 24.1 and 58 of the revised text of the 1964 Urban Leasing Law, had been subrogated to the tenant’s position prior to the entry into force of this law, only his spouse who was not legally or de facto separated may be subrogated, and failing that, the children of the tenant who lived in the rented dwelling and had lived with him during the two years prior to his death.

The contract shall expire upon the death of the subrogated person, unless the subrogated person was a child of the tenant not affected by a disability equal to or greater than 65 per cent, in which case it shall expire at the age of two years or when the child reaches the age of twenty-five years, whichever is later.

No further subrogations are authorised.

6.- Upon the death of the person who, in accordance with article 59 of the Consolidated Text of the 1964 Urban Leases Act, occupied the dwelling by second subrogation, no further subrogations are authorized.

7.-The rights recognized in sections 4 and 5 of this provision to the spouse of the tenant shall also apply to the person who has been living with the tenant permanently in a relationship of affectivity analogous to that of the spouse, regardless of their sexual orientation, for at least two years prior to the time of death, unless they had descendants in common, in which case mere cohabitation shall suffice.

8.- During the ten years following the entry into force of the law, if the subrogation provided for in sections 4 and 5 above has taken place in favour of children over sixty-five years of age or who are recipients of public retirement or permanent disability benefits to the degree of absolute permanent incapacity or great incapacity, the contract shall terminate upon the death of the subrogated child.

9.-It corresponds to the persons who exercise the subrogation contemplated in sections 4, 5 and 7 of this provision to prove the condition of cohabitation with the deceased tenant that is appropriate for each case.

The condition of cohabitation with the deceased tenant must be habitual and must necessarily occur in the rented dwelling.

The provisions on procedure and order of precedence established in article 16 of this law shall apply to subrogation by cause of death regulated in sections 4 to 7 above.

In no case may the beneficiaries of a subrogation renounce it in favour of another of a different degree of priority.

(C) Other rights of the lessor.

10 For annuities of the contract commencing after the entry into force of this law, the lessor shall have the following rights:

10.1. In the Wealth Tax, the value of the leased property shall be determined by capitalisation at 4 per cent of the income accrued, provided that the result is less than that which would result from the application of the rules for the valuation of real estate provided for in the Wealth Tax Law.
10.2. He may demand from the lessee the total amount of the Property Tax payable corresponding to the leased property. When the quota is not individualized, it will be divided in proportion to the surface area of each dwelling.
10.3. The tenant may be charged the amount of repair work necessary to maintain the home in a condition to serve for the agreed use, in the terms resulting from Article 108 of the revised text of the 1964 Urban Leases Act or in accordance with the following rules:
1.ª. That the repair has been requested by the tenant or agreed by final judicial or administrative resolution.
If there are several affected tenants, the request must have been made by the majority of the affected tenants or, as the case may be, by tenants representing the majority of the participation quotas corresponding to the affected flats.

2.ª. From the capital invested in the expenses incurred, any public aid or aid received by the owner will be deducted.
3.ª. To the capital invested will be added the amount of legal interest of the money corresponding to said capital calculated for a period of five years.
4.ª. The lessee will pay annually an amount equivalent to 10 per cent of the amount referred to in the previous rule, until full payment.
In the event that several lessees are affected, the amount referred to in the previous rule shall be distributed among them in accordance with the criteria established in section 2 of article 19 of this law.

5.ª. The annual amount paid by the lessee may not exceed the lesser of the following two amounts: five times his current income plus the amounts assimilated to the same or the amount of the minimum interprofessional salary, both considered in its annual calculation.
10.4. If the lessor has chosen to carry out the repercussion in accordance with the provisions of Article 108 above, the repercussion shall be made in proportion to the surface area of the affected property.
10.5. May pass on to the lessee the amount of the cost of services and supplies that occur from the entry into force of the law.
Except in the case that by express agreement between the parties all these costs are borne by the lessor.

D) Rent discounting.

  1. The rent of the contract may be updated at the request of the lessor after a reliable request has been made to the lessee.

This requirement may be made on the date on which, from the entry into force of the law, an annual period of validity of the contract is fulfilled.

Once said requirement has been made, in each of the years in which this update applies, the lessor shall notify the lessee of the amount of the update, accompanied by certification from the National Statistics Institute expressing the determining indices of the amount notified.

The update shall be carried out in accordance with the following rules:

1.ª. The rent initially agreed in the contract that gave rise to the lease must maintain, during each of the years in which the update takes place, with the updated rent, the same proportion as the General National Index of the Consumer Price Index System or the General National Index or General Urban Index of the Cost of Living Index System of the month prior to the date of the contract with respect to the Index corresponding to the month prior to the date of the update.
For the leases of dwellings included in article 6.2 of the rewritten text of the 1964 Urban Leases Act held prior to 12 May 1956, the revalued rent referred to in article 96.10 of the aforementioned rewritten text, whether or not it was required by the lessor at the time of the rewritten text, shall be taken as the initial rent; and, as the index corresponding to the date of the contract, that of June 1964.

In the case of leases of dwellings not included in article 6.2 of the aforementioned recast text celebrated before 12 May 1956, the initial rent received in the month of July 1954 will be taken as the index corresponding to the date of the contract in the month of March 1954.

2.ª. Of the updated rent corresponding to each annual period calculated in accordance with the provisions of the previous rule or rule 5, only the percentage resulting from the provisions of the following rules shall be payable to the tenant, provided that this amount is greater than the rent that the tenant was paying at that time, increased by the amounts assimilated to the rent.
In the event that, when applying the corresponding percentage table, it appears that the rent being paid at that time is higher than the amount corresponding to the application of such tables, the percentage immediately higher shall be applied, or in its case the next one or subsequent ones that correspond, until the amount payable of the updated rent is higher than the one being paid.

3.ª. The updated rent shall absorb the amounts assimilated to the rent from the first year of the review.
Amounts assimilated to rent for these exclusive purposes are considered to be the impact on the lessee of the increase in the cost of the services and supplies referred to in article 102 of the revised text of the Urban Leases Act and the impact of the cost of the works referred to in article 107 of the aforementioned legal text.

4.ª. From the year in which the one hundred percent update is reached, the corresponding rent may be updated by the lessor or by the lessee in accordance with the percentage variation experienced in the previous twelve months by the General Index of the Consumer Price Index System, except when the contract expressly contains another update system, in which case this will be applicable.
5.ª. When the updated income calculated in accordance with the provisions of rule 1 is higher than that resulting from applying the provisions of the following paragraph, the latter shall be taken as the revised income.
The rent for these purposes shall be determined by applying the following percentages to the cadastral value of the leased property in force in 1994:

  • 12 per cent, when the cadastral value was derived from a revision that had taken effect after 1989.
  • 24 per cent for the rest of the cases.
    For properties located in the Basque Country, the percentage of 24 per cent will be applied to the cadastral value; for properties located in Navarre, the percentage of 12 per cent will be applied to the cadastral value.

6.ª. The tenant may oppose the updating of the rent by duly notifying the lessor within thirty calendar days following receipt of the latter’s request, in which case the rent paid by the tenant up to that time, increased by the amounts assimilated to it, may only be updated annually with the variation experienced by the National General Index of the System of Consumer Price Indices in the twelve months immediately prior to the date of each updating.
Lease contracts for which the tenant exercises the option referred to in this rule shall expire within a period of eight years, even if there is a subrogation, the said period being counted from the date of the lessor’s reliable request.

7.ª. The rent update provided for in this section shall not be applicable when the sum of the total income received by the tenant and the persons who habitually live with him in the rented dwelling do not exceed the following limits:
Number of persons who live together in the rented dwelling Limit in number of times the minimum interprofessional salary
1 ó 2 2,5
3 ó 4 3
More than 4 3,5
The income to be considered shall be the totality of that obtained during the tax year prior to that in which the lessor promotes the updating of the rent.

In the absence of proof by the lessee of the income received by all the persons living in the rented dwelling, it shall be presumed that the intended update is appropriate.

8.ª. In those cases in which the update is not applicable, the rent paid by the tenant, increased by the amounts assimilated to it, may be updated annually on the basis of the variation experienced by the General Index of Consumer Prices in the twelve months immediately prior to the date of each update.
9.ª. The income update, when applicable, will be carried out in the following periods:
a) In ten years, when the sum of the total income received by the tenant and the persons who habitually live with him in the rented dwelling does not exceed 5.5 times the minimum interprofessional salary.
In this case, the required percentages of the updated rent shall be as follows:

Annual updating period from the entry into force of the Law Required percentage of the updated income
1.º 10 %
2.º 20 %
3.º 30 %
4.º 40 %
5.º 50 %
6.º 60 %
7.º 70 %
8.º 80 %
9.º 90 %
10 100 %
(b) in five years, where the sum indicated is equal to or greater than 5.5 times the minimum inter-professional wage.
In this case, the required percentages of the updated income shall be twice those indicated in point (a) above.

10.ª. The provisions of this section shall replace the provisions for housing leases in numbers 1 and 4 of article 100 of the revised text of the 1964 Urban Leases Act.
Third Business Premises Lease Contracts, entered into before 9 May 1985

A) Applicable normative regime.

  1. Business premises leases entered into before 9 May 1985 and still in force on the date of entry into force of this law shall continue to be governed by the provisions of the revised text of the 1964 Urban Leases Act relating to business premises leases, except for the modifications contained in the following sections of this transitory provision.

B) Extinction and subrogation.

  1. Contracts that on the date of entry into force of this law are in a situation of legal extension shall be extinguished in accordance with the provisions of paragraphs 3 to 4 below.
  2. Leases whose lessee is a natural person shall be extinguished due to his retirement or death, unless his spouse is subrogated and the same activity continues in the premises.

In the absence of a surviving spouse who continues the activity or, in the event that the latter has been subrogated, to his retirement or death, if at that time twenty years have not elapsed since the approval of the law, a descendant of the tenant who continues the activity carried out in the premises may be subrogated in the contract. In this case, the contract will last for a sufficient number of years until twenty years have elapsed from the entry into force of the law.

The first subrogation provided for in the preceding paragraphs may not take place when two transfers have already taken place in the lease in accordance with the provisions of article 60 of the revised text of the Urban Leases Act. The second subrogation provided for may not take place when a transfer has already taken place in the lease in accordance with the provisions of the aforementioned article 60.

The current tenant and his or her spouse, if subrogated, may transfer the business premises under the terms set out in article 32 of the revised text of the Urban Leases Act.

This transfer will allow the continuation of the lease for a minimum of ten years from its completion or for the number of years remaining from the time the transfer is made to compute twenty years from the approval of the law.

When in the ten years prior to the entry into force of the law the transfer of the business premises has taken place, the terms contemplated in this section will be increased by five years.

For the purposes of this section, the date of the transfer shall be taken to be that of the deed referred to in article 32 of the revised text of the 1964 Urban Leases Act.

  1. Leases of business premises whose tenant is a legal entity shall be extinguished in accordance with the following rules:

1.ª. The leases of premises in which commercial activities are developed, in twenty years.
For these purposes, commercial activities are considered to be those included in Division 6 of the rate of the Tax on Economic Activities.

Exceptions are premises with a surface area greater than 2,500 square metres, in which case extinction will occur within five years.

2.ª. Leases of premises in which activities other than those referred to in rule 1 are carried out and which correspond to quotas according to the rates of the Tax on Economic Activities:

  • Less than 85,000 pesetas in twenty years.
  • Between 85,001 and 130,000 pesetas, in fifteen years.
  • Between 130,001 and 190,000 pesetas, in ten years.
  • More than 190,000 pesetas in five years.
    The quotas that must be taken into consideration for the purposes set forth in this section are the minimum municipal quotas or minimum quotas according to tariff, which include, where appropriate, the surface supplement, corresponding to fiscal year 1994. In those activities for which there is a reduction in the Economic Activities Tax quota, this reduction will be applied to the minimum municipal quota or minimum quota according to tariff for the purpose of determining the corresponding amount.

The periods mentioned in the previous rules will be counted from the entry into force of this law. When, in the ten years prior to said entry into force, the transfer of the business premises has taken place, the periods for termination of the contracts shall be increased by five years. The date of transfer will be taken as the date of the deed referred to in article 32 of the revised text of the Law on Urban Leases.

When activities corresponding to different quotas are carried out in a premises, only the largest of them will be taken into consideration for the purposes of this section.

The lessee is responsible for proving the quota corresponding to the activity carried out in the leased premises. In the absence of proof, the lease shall have the minimum duration provided for in the first paragraph.

  1. Contracts in which, on the date of entry into force of this law, the period agreed in the contract has not yet elapsed shall last for the time remaining for this period to be fulfilled. Where this period of time is shorter than that which would result from the application of the rules of paragraph 4, the lessee may make the lease last for the period resulting from the application of those rules.

In the cases provided for in this section and in section 4, tacit renewal shall be governed by the provisions of article 1,566 of the Civil Code, and the provisions of this law relating to leases of urban properties for use other than housing shall be applicable to renewed leases.

C) Updating of rent.

From the entry into force of this law, on the date on which each year of validity of the contract is fulfilled, the rent of business premises leases may be updated, at the request of the lessor, subject to a reliable request to the lessee in accordance with the following rules:

1.ª. The rent initially agreed in the contract that gave rise to the lease must keep the rent updated in the same proportion as the General National Index of the Consumer Price Index System or the General National Index or General Urban Index of the Cost of Living Index System of the month prior to the date of the contract with respect to the index corresponding to the month prior to the date of each update.
For contracts entered into prior to 12 May 1956, the revalued rent referred to in article 96.10 of the aforementioned recast text, whether or not it was required by the lessor at the time, shall be taken as the initial rent, and the index corresponding to the date of the contract shall be that of June 1964.

2.ª. Of the updated rent corresponding to each annual period calculated in accordance with the provisions of the previous rule, only the percentage resulting from the percentage tables provided for in the following rules depending on the corresponding update period shall be payable by the lessee, provided that this amount is greater than the rent paid by the lessee at that time increased by the amounts assimilated to the rent.
In the event that, when applying the corresponding percentage table, it appears that the rent being charged at that time is higher than the amount corresponding to the application of such tables, the percentage immediately higher would be applied, or in its case the next one or subsequent ones that correspond, until the amount payable of the updated rent is higher than the one being charged without the update.

3.ª. In the leases to which, in accordance with the provisions of section 4, an extinction period of five or ten years corresponds, the rent review shall be carried out in accordance with the following table:
Updating as from the entry into force of the Law Required percentage of the updated rent
1.º 10 %
2.º 20 %
3.º 35 %
4.º 60 %
5.º 100 %
4.ª. In the leases included in section 3, and in those to which, in accordance with the provisions of section 4, an extinction period of fifteen or twenty years corresponds, the rent review shall be carried out in accordance with the percentages and terms established in rule 9.ª a), section 11 of the second transitory provision.
5.ª. The updated income shall absorb the amounts assimilated to the income from the first year of the review.
Amounts assimilated to the rent for these exclusive purposes are considered to be the repercussion on the lessee of the increase in the cost of the services and supplies referred to in article 102 of the revised text of the Urban Leases Act and the repercussion of the cost of the works referred to in article 107 of the aforementioned legal text.

6.ª. From the year in which the 100% discount is reached, the corresponding rent may be updated by the lessor or by the lessee in accordance with the percentage variation experienced in the previous twelve months by the General Index of the Consumer Price Index System, except when the contract expressly contains another updating system, in which case this will be applicable.
7.ª. The provisions of this section shall replace the provisions for leases of business premises in number 1 of article 100 of the revised text of the 1964 Urban Leases Act.
8.ª. In order to determine the date of conclusion of the contract, the date on which it was signed will be taken into account, regardless of whether the current tenant is the original tenant or the person subrogated in his or her position.

  1. The tenant may revise the rent in accordance with the provisions of rules 1, 5 and 6 of the previous section in the first rent that corresponds to be paid, from the request for revision made by the lessor or on his own initiative.

In this case, the minimum term provided for in section 3 and the terms provided for in section 4 shall be increased by five years.

The provisions of the previous paragraph shall also apply in the event that the rent being paid at the time of entry into force of the law is greater than that resulting from the updating provided for in section 7.

  1. The rent revision provided for the contracts referred to in paragraph 3 and for those referred to in paragraph 4 that have an extinction period of fifteen or twenty years shall not apply when the lessee opts not to apply it.

To this end, the lessee must notify the lessor in writing of his intention within 30 calendar days of receipt of the lessor’s request for a rent review.

Lease agreements in respect of which the lessee exercises the option not to revise the rent shall expire on the expiration of the fifth annuity counted from the entry into force of this law.

D) Other rights of the lessor.

  1. The provisions of section 10 of the second transitory provision shall also apply to these contracts in the case of annuities of the contract that commence as from the entry into force of this law and until its termination.

E) Other rights of the lessee.

  1. The lessee shall be entitled to an indemnity equal to eighteen monthly payments of the rent in force at the time of the termination of the lease when, before the expiry of one year from the termination of the lease, any person begins to exercise in the premises the same activity or an activity related to that which he exercised. Activities that are typically able to benefit, even if only partially, from the clientele captured by the activity carried out by the lessee shall be considered to be related.
  2. When the lease is terminated in accordance with the preceding paragraphs, the lessee has the right of first refusal to continue in the leased premises if the lessor intends to enter into a new lease with a different lessee within one year of the legal termination of the lease.

To this end, the lessor must give the lessee a reliable notice of his intention to enter into a new lease, the rent offered, the essential terms of the lease and the name, address and circumstances of the new lessee.

The preferential right to continue in the leased premises in accordance with the conditions offered must be exercised by the lessee within a period of thirty calendar days from the day following that of the notification, within which time the contract is signed.

The lessor, after thirty calendar days from the notification without the lessee having signed the proposed lease, must formalize the new lease within one hundred and twenty calendar days from the notification to the lessee whose contract expired.

If the lessor had not made the notice or omitted in it any of the requirements or were different from the agreed rent, the person of the new tenant or the other essential conditions of the contract, the tenant whose contract was extinguished will have the right to be subrogated, by operation of law, in the new lease within sixty calendar days of the lessor sending him a true and legalized copy of the new lease concluded for this purpose, and he is entitled to exercise the eviction action by the procedure established for the exercise of the right of withdrawal.

The lessor is obliged to send to the lessee whose contract has expired, a copy of the new contract concluded within one year of its termination, within fifteen days of its conclusion.

The exercise of this preferential right shall be incompatible with the receipt of the compensation provided for in the previous section, the lessee being able to choose between one and the other.

  1. This transitional provision shall apply to contracts for the lease of business premises for a pharmacy office entered into before 9 May 1985 and subsisting on 31 December 1999. Section 12 of the 3rd Transitory Provision introduced by the 8th Additional Provision of Law 55/1999, 29 December, on fiscal, administrative and social measures (“B.O.E.” 30 December). Validity: 1 January 2000
    Fourth assimilated leases entered into prior to 9 May 1985
  2. Leases similar to tenancy agreements referred to in article 4.2 of the consolidated text of the 1964 Urban Leases Act and leases similar to business premises referred to in article 5.2 of the same legal text, entered into before 9 May 1985 and still existing at the entry into force of this Act, shall continue to be governed by the applicable rules of the aforementioned consolidated text, except for the modifications contained in the following sections of this transitional provision.
  3. Leases assimilated to tenancy shall be governed by the provisions of the third transitional provision. For these purposes, contracts entered into by the Catholic Church and by nonprofit Corporations shall be understood to be equivalent to those mentioned in Rule 2 of Section 4, which have a fifteen-year extinction period. The others shall be understood to be equivalent to those mentioned in the aforementioned rule 2 which have an extinction period of ten years.
  1. Leases assimilated to business premises shall be governed by the provisions of the third transitory provision for leases of premises referred to in rule 2 of section 4 which correspond to a quota greater than 190,000 pesetas.
  2. Leases of urban properties in which professional activities are carried out shall be governed by the provisions of the previous section.

Fifth Officially protected housing leases

The leases of subsidized housing that subsist at the entry into force of this law will continue to be governed by the regulations that apply to them.

Sixth Judicial Proceedings

  1. Title V of the present law shall be applicable to litigation relating to urban property rental contracts that subsist on the date of entry into force of this law.
  2. The provisions regarding the value of the lawsuit and the conformity of the judgments, which shall be immediately applicable to appeals in cassation in disputes concerning business premises lease contracts in which the Provincial Court’s judgement was issued after the entry into force of this law, shall be excepted.

Sole derogating provision Repealing provisions

Decree 4104/1964 of 24 December, approving the revised text of the 1964 Urban Leases Act, articles 8 and 9 of Royal Decree-Law 2/1985 of 30 April on Economic Policy measures, and any provisions of equal or lower rank that oppose the provisions of this Act are hereby repealed, without prejudice to the transitory provisions of this Act.

The Decree of 11 March 1949 is also repealed. This repeal shall produce its effects in the territorial scope of each Autonomous Community when the provisions referred to in the third additional provision of this law are issued.

Final Provisions.

First Nature of the Law

This law is enacted under article 149.1.8 of the Constitution.

Second Entry into Force

This Act shall enter into force on 1 January 1995.

Paragraph 3 of the second transitional provision shall enter into force on the day following the publication of this law in the “Official State Gazette”.

Transfers of business premises produced from the date indicated in the preceding paragraph shall be deemed to have occurred from the entry into force of the law.

Third Publication by the Government of the Consumer Price Indices referred to in this law

Within one month of the entry into force of this law, the Government shall publish in the “Official State Gazette” a list of the Consumer Price Indices from 1954 until its entry into force.

Once the list referred to in the previous paragraph has been published, the National Statistics Institute, when announcing monthly the successive modifications of the Consumer Price Index, shall also record the variation of the proportion with the base index of 1954.

Fourth Compensation by tax route

The Government shall proceed, one year after the entry into force of the law, to submit to the Cortes Generales a bill to arbitrate a system of tax benefits to compensate lessors, in contracts entered into prior to 9 May 1985 that subsist to the entry into force of the law, while the contract remains in force, when such lessors do not enjoy the right to review the rent of the contract by application of rule 7.ª of paragraph 11 of the second transitory provision of this law.

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SPANISH URBAN RENTAL LAW. Additional provisions.

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First Regime for social housing for rent

  1. The term of the legal regime for social housing qualifying for rental as from the entry into force of this law shall expire when the period established in the applicable regulations for the repayment of the qualified loan obtained for its promotion or, in the absence of such a loan, twenty-five years after the date of the corresponding definitive classification, has elapsed.
  2. The initial maximum rent per useful square metre of the social housing referred to in the previous section shall be the percentage of the corresponding maximum sale price in accordance with applicable state or regional regulations.
  3. No revision of the rents of social housing shall be applied unless there is an explicit agreement between the parties. In the event of an express agreement between the parties on some mechanism for reviewing monetary values that is not detailed in the reference index or methodology, the rent will be reviewed for each year by reference to the annual variation of the Competitiveness Guarantee Index. Number 3 of the first additional provision drafted by section two of the first final provision of Law 2/2015, of 30 March, on the de-indexation of the Spanish economy (“B.O.E.” 31 March). Validity: 1 April 2015
  4. In addition to the initial or revised rentals, the lessor may receive the actual cost of the services enjoyed by the lessee and paid by the lessor.
  5. Without prejudice to the administrative sanctions that may apply, clauses and stipulations that establish rents higher than the maximum authorised in the applicable regulations for subsidised housing shall be null and void.
  6. The provisions of the previous sections shall not apply to publicly developed housing regulated by Royal Decree-Law 31/1978.
  7. The provisions of the preceding sections shall be of general application in the absence of specific legislation of the Autonomous Communities with competence in the matter.
  8. The renting of publicly promoted social housing shall be governed by their particular rules regarding the term of the contract, variations in rent, limits on the repercussion of amounts for repairing damage and improvements, and the provisions regarding the right of assignment and subrogation in renting, and in what is not regulated by them by the provisions of this law, which shall apply in full when the renting ceases to be subject to said particular provisions.

The exception shall not apply to questions of competence and procedure in which the provisions of this law shall apply in their entirety.

Second Modification of the Mortgage Law

Amendment incorporated into D. 8 February 1946 (“B.O.E.” 27 February), approving the Revised Text of the Mortgage Law.

  1. Within a period of nine months from the entry into force of this law, the requirements for access of urban leases to the Land Registry shall be established in accordance with the regulations.

Third Deposit of bonds

  1. The Autonomous Communities may establish the obligation that the lessors of urban property subject to this law deposit the amount of the deposit regulated in article 36.1 of this law, without accrual of interest, at the disposal of the Autonomous Administration or of the public entity designated until the extinction of the corresponding contract. If, one month after the end of the contract, the Autonomous Administration or the competent public body does not refund the amount deposited, the corresponding legal interest shall accrue.
  2. In order to promote transparency and facilitate the exchange of information for the exercise of public policies, the regulations governing the deposit of a bond referred to in the previous section shall determine the data to be provided by the lessor, which shall include, as a minimum:

(a) the identifying data of the parties lessor and lessee, including addresses for notification purposes.
b) The data identifying the property, including the postal address, year of construction and, where appropriate, year and type of refurbishment, constructed area for private use by use, cadastral reference and energy classification.

c) The characteristics of the lease contract, including the annual rent, the time period established, the updating system, the amount of the deposit and, where appropriate, additional guarantees, the type of agreement for payment of basic supplies, and whether it is furnished.
Third additional provision drafted by section fifteen of the first article of R.D.-law 7/2019, of 1 March, on urgent measures regarding housing and rent (“B.O.E.” 5 March). Effective: March 6, 2019
Fourth Aid for access to housing

Persons who, in application of the provisions of the second transitional provision of this law, are deprived of the right to subrogation “mortis causa” recognized by the revised text of the Law on Urban Leases, approved by Decree 4104/1964 of 24 December, shall be preferential subject of public aid programs for access to housing, provided that they meet the requirements in terms of maximum income established in such programs.

Fifth Amendment to the Code of Civil Procedure

  1. Article 1.563 of the Code of Civil Procedure shall be worded as follows:


Modifications incorporated into R.D. 3 February 1881 (“GACETA” from 5 to 22 February), enacting the Civil Procedure Law.

  1. Appeals against judgments in the matters referred to in article 38 shall have preferential processing before both the Provincial Courts and the Superior Courts.

In proceedings involving the launch, the defendant will not be admitted to the appeals and cassation appeals, when appropriate, if he does not prove, when filing them, that he has satisfied the rents due and those which he must pay in advance in accordance with the contract, or if he does not deposit them judicially or notarially.

If the tenant does not comply with the foregoing, the judgment shall be deemed to be final and shall be executed, provided that required by the judge or court hearing the same does not meet its obligation to pay or consignment within five days.

The remedy of cassation or appeal filed by the tenant shall also be deemed void, regardless of the state in which the tenant is in, if during the substantiation of the same, the tenant fails to pay the instalments that are due or those that must be advanced. However, the tenant may cautiously advance or consign the payment of several unexpired periods, which will be subject to liquidation once the sentence is signed. In any case, the payment of such amounts shall not be understood as contractual novation.

Articles 1.566 and 1.567 of the Code of Civil Procedure shall be worded as follows:


Modifications incorporated into R.D. 3 February 1881 (“GACETA” from 5 to 22 February), enacting the Code of Civil Procedure.
Number 2 of the 5th Additional Provision drafted by Law 50/1998, 30 December (“B.O.E.” 31 December), on Fiscal, Administrative and Social Order Measures.

  1. Article 1.687.3 of the Code of Civil Procedure shall be worded as follows:


Modifications incorporated into R.D. 3 February 1881 (“GACETA” from 5 to 22 February), enacting the Code of Civil Procedure.
Sixth Census of urban leases

  1. The Government shall proceed, through the Ministry of Public Works, Transport and the Environment, within one year of the entry into force of this Act, to draw up a census of the rental contracts for dwellings subject to this Act that are still in force.
  2. This census shall include data identifying the landlord and tenant, the rent of the contract, whether or not there are review clauses, their duration and the date of the contract.
  3. To this end, the lessors must send to the Ministry of Public Works, Transport and the Environment, within a maximum period of three months from the entry into force of the law, the details of the contract referred to in the previous paragraph.
  4. The tenants shall have the right to request the inclusion in the census referred to in this provision of their respective contracts, giving written notice to the lessor of the data sent.
  5. The breach of the obligation provided for in paragraph 3 above shall deprive the lessor who has breached the obligation of the right to tax benefits referred to in the fourth final provision of this Act.

Seventh Amendment Law 36/1988, of 5 December, on Arbitration

A number 3 is added to article 30 of Law 36/1988, of 5 December, on Arbitration, the content of which shall be as follows:

«…»

Amendment incorporated into Law 36/1988, December 5 (“B.O.E.” December 7), on Arbritraje.
It should be borne in mind that Law 36/1988, of 5 December, has been repealed by Law 60/2003, of 23 December, on Arbitration (“B.O.E.” 26 December).
Eighth right of return

The right of return regulated in the fourth additional provision. 3. of the consolidated text of the Law on the Land and Urban Development Regime, approved by Royal Legislative Decree 1/1992, of 26 June, shall be governed by the provisions of this provision and, failing that, by the rules of the consolidated text of the 1964 Urban Leases Law.

When in the isolated urbanistic performances not expropriatory required by the urban planning, it was necessary to proceed to the total demolition or to the integral rehabilitation with conservation of facade or of structure of a building, in which there exist rented urban housings is any the date of the rent, the tenant shall have the right to be provided by the landlord of the aforementioned property with a new dwelling with a surface area of not less than 50 per cent of the previous one, provided that it has at least 90 square metres, or not less than that which it has, if it did not have such a surface area, with characteristics analogous to that of the former and which is located on the same site or in the environment of the demolished or renovated building.

Ninth Declaration of the situation of handicap

To the effects foreseen in this law, the situation of handicap and its degree must be declared, in accordance with current legislation, by the centres and services of the competent Public Administrations.First Contracts entered into as from 9 May 1985

Tenth Prescription

All the rights, obligations and actions resulting from the lease contracts contemplated in this law, including those subsisting to the entry into force of the same, shall lapse, when there is no specific limitation period provided, in accordance with the provisions of the general regime contained in the Civil Code.

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SPANISH URBAN RENTAL LAW 2019. TITLE IV. Common provisions

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Article 36 Bail

  1. Upon conclusion of the contract, it shall be compulsory to require and provide a cash deposit in an amount equivalent to one month’s rent for renting housing and two months’ rent for renting for use other than housing.
  2. During the first five years of the contract, or during the first seven years if the lessor is a legal entity, the deposit shall not be subject to updating. But each time the lease is extended, the lessor may demand that the deposit be increased, or the lessee reduced, until it becomes equal to one or two monthly payments of the current rent, as appropriate, at the time of the extension.
  3. The updating of the deposit during the period of time in which the term agreed for the lease exceeds five years, or seven years if the lessor is a legal entity, shall be governed by the provisions to that effect by the parties. In the absence of a specific agreement, what has been agreed upon regarding the updating of the rent shall also be presumed to have been agreed upon for the updating of the deposit.
  4. The balance of the cash deposit that must be returned to the tenant at the end of the lease, will accrue legal interest, one month after the delivery of the keys by the same without having made effective such return.
  5. The parties may agree on any type of guarantee of compliance by the lessee with his obligations under the lease in addition to the cash deposit.

In the case of rental of housing, in contracts of up to five years, or up to seven years if the lessor is a legal entity, the value of this additional guarantee may not exceed two monthly rent.

  1. Exempted from the obligation to provide a bond are the General State Administration, the Administrations of the autonomous communities and the entities that make up the Local Administration, the autonomous bodies, the public business entities and other public entities linked or dependent on them, and the Mutual Collaborating with the Social Security in its public function of collaboration in the management of Social Security, as well as their Joint Centres, when the income has to be paid from their respective budgets. Article 36 drafted by section fourteen of the first article of R.D.-law 7/2019, of 1 March, on urgent measures regarding housing and rent (“B.O.E.” 5 March). Effective: March 6, 2019

Article 37 Formalisation of the lease

The parties may oblige each other to conclude the lease contract in writing.

In this case, the identity of the contracting parties, the identification of the leased property, the agreed duration, the initial rent of the contract and other clauses that the parties have freely agreed.

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SPANISH URBAN RENTAL LAW 2019. TITLE III. Rents for other use than housing

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Article 29 Disposal of the leased property

The purchaser of the leased property will be subrogated to the rights and obligations of the lessor, unless the purchaser meets the requirements of Article 34 of the Mortgage Law.

Article 30 Conservation, improvement and works of the lessee

The provisions of articles 21, 22, 23 and 26 of this law shall also apply to leases regulated by this Title. The provisions of article 19 shall also be applicable from the beginning of the lease.

Article 31 Pre-emptive right of acquisition

The provisions of Article 25 of this law shall apply to the leases regulated by this Title.

Article 32 Assignment of the contract and sublease

Where a business or professional activity is carried out on the leased property, the lessee may sublet the property or assign the lease without the consent of the lessor.

  1. The lessor is entitled to a rent increase of 10 per cent of the current rent in the event of a partial sublease, and 20 per cent in the event of the transfer of the contract or the total sublease of the leased property.
  2. A change in the person of the lessee as a result of the merger, transformation or spin-off of the leasing company shall not be considered a transfer, but the lessor shall be entitled to the increase in rent provided for in the previous section.
  3. Both the assignment and the sublease must be notified in a reliable manner to the lessor within one month from the date on which they were agreed.

Article 33 Death of the lessee

In the event of the death of the lessee, when a business or professional activity is carried out in the premises, the heir or legatee who continues to carry out the activity may be subrogated to the rights and obligations of the lessee until the termination of the contract.

The subrogation must be notified in writing to the lessor within two months of the date of death of the lessee.

Article 34 Tenant Indemnification

The extinction, due to the expiration of the conventional term of the lease of a property in which during the last five years a commercial activity of sale to the public has been exercised, will give the lessee the right to an indemnity at the expense of the lessor, provided that the lessee has stated four months before the expiration of the term its will to renew the contract for a minimum of five more years and for a market rent. In the absence of an agreement, the one determined for this purpose by the arbitrator appointed by the parties shall be considered a market rent.

The amount of the indemnity shall be determined as follows:

  1. If the lessee commences in the same municipality, within six months following the expiration of the lease, the exercise of the same activity to which he was dedicated, the compensation shall include the expenses of the relocation and the damages derived from the loss of clientele occurred with respect to that which he had in the previous premises, calculated with respect to that had during the first six months of the new activity.
    If the lessee starts a different activity within the six months following the termination of the lease or does not start any activity at all, and the lessor or a third party develops in the property within the same period the same activity or a similar one developed by the lessee, the compensation will be one monthly payment per year of duration of the contract, with a maximum of eighteen monthly payments.
    Activities that are typically eligible for benefits are considered to be related, although only part of the clientele captured by the activity carried out by the lessee.

In the event of the parties failing to reach an agreement on the amount of the compensation, it shall be fixed by the arbitrator appointed by the parties.

Article 35 Resolution in its own right

The lessor may terminate the contract by operation of law for the reasons provided for in letters a), b), d) and e) of paragraph 2 of Article 27 and for the transfer or sublease of the premises in breach of the provisions of Article 32.

Article 35 drafted by section nineteen of the first article of Law 4/2013, of 4 June, on measures to make the housing rental market more flexible and encourage it (“B.O.E.” 5 June). Validity: 6 June 2013

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