Spanish Urban Rental Law 2019. Titel II. Housing leases

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FIRST CHAPTER

GENERAL RULES

Article 6 Nature of rules

The stipulations that modify the rules of this Title to the detriment of the lessee or sublessee shall be null and void, and shall be considered as not having been laid down, except in those cases in which the rule itself expressly authorizes it.

Article 7 Conditions for renting a dwelling

The rental of a dwelling shall not lose this condition even if the tenant does not have a permanent dwelling on the rented property, provided that it is inhabited by a spouse who is not legally or de facto separated, or their dependent children.

Article 7 drafted by paragraph three 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 8 Assignment of the contract and sublease

  1. The contract may not be assigned by the lessee without the written consent of the lessor. In case of assignment, the assignee is subrogated in the position of the assignor vis-à-vis the lessor.
  2. The rented dwelling may only be partially sublet with the prior written consent of the lessor.

The sublease shall be governed by the provisions of this Title for the lease when the part of the subleased property is used by the sublessee for the purpose indicated in Article 2.1. If this condition is not met, it shall be governed by what has been agreed between the parties.

The right of the subtenant shall, in any case, be extinguished when the right of the subtenant who subleased does so.

The price of the sublease may in no case exceed the price corresponding to the lease.

CHAPTER II

THE DURATION OF THE CONTRACT

Article 9 Minimum period

  1. The duration of the lease shall be freely agreed by the parties. If it is less than five years, or less than seven years if the lessor is a legal entity, when the contract expires, it shall be compulsorily extended for annual periods until the lease reaches a minimum duration of five years, or seven years if the lessor is a legal entity, unless the lessee declares to the lessor, at least thirty days prior to the date of termination of the contract or any of the extensions, his will not to renew it.

The term will begin to be counted from the date of the contract or from the putting of the property at the disposal of the lessee if this was later. The tenant shall be responsible for proof of the date of availability.

Leases for which a period of duration has not been stipulated or is indeterminate shall be understood to be celebrated for one year, without prejudice to the right of annual extension for the lessee, in the terms resulting from the previous paragraph.

  1. Once the first year of the duration of the contract has elapsed and provided that the lessor is a natural person, the obligatory extension of the contract shall not proceed when, at the time of its conclusion, it has been expressly stated in the contract that the lessor needs to occupy the rented dwelling before the end of five years in order to assign it to permanent housing for himself or his relatives in the first degree of consanguinity or by adoption or for his spouse in the event of a final judgement of separation, divorce or marriage annulment.

To exercise this power to recover the dwelling, the lessor must inform the lessee that he or she needs the rented dwelling, specifying the cause or causes among those foreseen in the previous paragraph, at least two months before the date on which the dwelling is going to be needed and the lessee will be obliged to hand over the rented property within said period if the parties do not reach a different agreement.

If after three months from the termination of the contract or, as the case may be, the effective eviction from the dwelling, the landlord or his family members in the first degree of consanguinity or by adoption or his spouse in the event of a final separation sentence have not proceeded, divorce or marriage annulment to occupy this by itself, as the case may be, the tenant may choose, within thirty days, between being replaced in the use and enjoyment of the rented housing for a new period of up to five years, otherwise respecting the contractual conditions existing at the time of extinction, with compensation for the expenses that the eviction from the dwelling would have entailed up to the time of reoccupation, or to be compensated for an amount equivalent to one monthly payment for each year that remained to be completed up to the completion of five years, unless the occupation had not taken place due to force majeure, understood as such, the impediment caused by those events expressly mentioned in the rule of rank of Law to which the character of force majeure is attributed, or others that could not have been foreseen, or that, foreseen, were unavoidable.

Article 9 drafted by paragraph four of the first article of the 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 10 Contract extension

  1. If the expiry date of the contract, or any of its extensions, is reached after at least five years have elapsed, or seven years if the lessor is a legal entity, neither of the parties has notified the other, at least four months prior to that date in the case of the lessor and at least two months in the case of the lessee, If the lessee does not wish to renew the contract, the contract shall be compulsorily extended for annual periods up to a maximum of three more years, unless the lessee declares to the lessor, one month before the date of termination of any of the annuities, his wish not to renew the contract.
  2. The extended contract will continue to be subject to the legal and conventional regime to which it was subject. Article 10 drafted by paragraph five 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 11 Withdrawal of the contract

The lessee may withdraw from the lease once at least six months have elapsed, provided that the lessor is notified at least thirty days in advance. The parties may agree in the contract that, in the event of withdrawal, the lessee must indemnify the lessor with an amount equivalent to one month’s rent in force for each year of the contract that remains to be fulfilled. The periods of time less than one year shall give rise to the proportional part of the indemnity.

Article 11 drafted by paragraph six of the first article of Law 4/2013, of 4 June, on measures for making the housing rental market more flexible and promoting it (“B.O.E.” 5 June). Validity: 6 June 2013
Article 12 Withdrawal and expiration in case of marriage or cohabitation of the tenant

  1. If the tenant manifests his will not to renew the contract or to withdraw from it, without the consent of the spouse living with the tenant, the lease may continue for the benefit of the spouse.
  2. To this purpose, the lessor may require the spouse of the lessee to express his will in this regard.

Once the request has been made, the lease shall lapse if the spouse does not reply within fifteen days of the request. The spouse must pay the corresponding rent until the end of the contract, if it has not already been paid.

  1. If the tenant leaves the dwelling without express declaration of withdrawal or non-renewal, the lease may continue for the benefit of the spouse living with the tenant provided that within one month of such abandonment, the landlord receives written notification from the spouse stating his or her willingness to be a tenant.

If the contract is terminated due to lack of notice, the spouse will be obliged to pay the rent for that month.

  1. The provisions of the previous sections shall also apply in favour of the person who has been permanently living with the tenant in a relationship of affectivity analogous to that of the spouse, regardless of their sexual orientation, for at least two years prior to the withdrawal or abandonment, unless they have had offspring in common, in which case mere cohabitation shall suffice.

Article 13 Termination of the landlord’s right

If during the first five years of the contract, or seven years if the lessor is a legal entity, the lessor’s right is terminated by the exercise of a conventional retract, the opening of a trustee substitution, the forced alienation derived from a mortgage execution or judicial sentence or the exercise of a purchase option right, the lessee shall be entitled, in any case, to continue in the lease until five years or seven years respectively have elapsed, without prejudice to the non-renewal faculty provided for in article 9.1.

In contracts with an agreed duration of more than five years, or seven years if the lessor is a legal entity, if, after the first five years of the same, or the first seven years if the lessor is a legal entity, the lessor’s right is terminated by any of the circumstances mentioned in the preceding paragraph, the lease shall be terminated. The exception is the case in which the lease contract has accessed the Land Registry prior to the rights determining the termination of the right of the lessor. In this case, the lease shall continue for the agreed duration.

  1. The leases granted by usufructuary, tenancy and all those who have a similar right of use over the property, shall expire at the end of the right of the lessor, in addition to other causes of extinction resulting from the provisions of this law.
  2. Leases of other people’s dwelling which the tenant has entered into in good faith with the person who appears as the owner of the property in the Land Registry, or who appears to be so by virtue of a state of affairs the creation of which is attributable to the true owner, shall last for five years, without prejudice to the power of non-renewal referred to in article 9.1, unless the said owner is a legal person, in which case they shall last for seven years. Article 13 drafted by paragraph six 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 14 Disposal of the rented dwelling

The purchaser of a rented property will be subrogated to the rights and obligations of the lessor during the first five years of the contract, or seven years if the previous lessor was a legal entity, even if the requirements of Article 34 of the Mortgage Law are met.

If the agreed duration is more than five years, or more than seven years if the previous lessor is a legal entity, the acquirer will be subrogated for the entire agreed duration, unless it meets the requirements of Article 34 of the Mortgage Act. In this case, the acquirer must only support the lease for the time remaining for the course of the five-year term, or seven years in the case of a legal person, the transferor must compensate the lessee with an amount equivalent to one month’s rent in force for each year of the contract that, exceeding the five-year term, or seven years if the previous lessor was a legal person, remains to be complied with.

When the parties have stipulated that the alienation of the dwelling will extinguish the lease, the acquirer must only support the lease for the time remaining for the course of the term of five years, or seven years if the previous lessor was a legal person.

Article 14 drafted by paragraph seven 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 15 Separation, divorce or marriage annulment of the tenant

  1. In cases of marriage annulment, legal separation or divorce of the tenant, the non-tenant spouse may continue to use the rented dwelling when it is attributed to him or her in accordance with the provisions of the applicable civil legislation. The spouse to whom the use of the rented dwelling has been attributed in a permanent way or in a term superior to the term that remains to fulfill of the lease contract, will become the holder of the contract.
  2. The spouse’s willingness to continue to use the dwelling must be communicated to the landlord within two months of notification of the corresponding judicial decision, accompanied by a copy of said judicial decision or of the part of the same that affects the use of the dwelling. Article 15 drafted by paragraph nine 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
    Article 16 Death of tenant
  3. In the event of the death of the tenant, they may be subrogated in the contract:

a) The spouse of the tenant who, at the time of death, lived with him.
b) The person who has been living permanently with the tenant 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 common offspring, in which case mere living together will suffice.
c) The descendants of the tenant who at the time of his death were subject to his parental authority or guardianship, or had habitually lived with him during the previous two years.
d) Ascendants of the tenant who habitually lived with him during the two years preceding his death.
e) The siblings of the tenant in whom the circumstance foreseen in the previous letter concurs.

f) Persons other than those mentioned in the preceding letters who suffer a disability equal to or greater than 65 per cent, provided that they are related to the tenant up to the third degree and have lived with the tenant during the two years prior to the death.
If, at the time of the death of the tenant, none of these persons existed, the lease shall be terminated.

  1. If there are several of the aforementioned persons, in the absence of unanimous agreement as to which of them will be the beneficiary of the subrogation, the order of precedence established in the previous section shall apply, except that the septuagenarian parents shall be preferred to the descendants. Among the descendants and among the ascendants, preference shall be given to the nearest in degree, and among the siblings, to the double bond over the half-brother.

Cases of equality shall be resolved in favour of anyone with a disability equal to or greater than 65 per cent; in the absence of this situation, of anyone with greater family responsibilities and, ultimately, in favour of the youngest descendant, the oldest ascendant or the youngest sibling.

  1. The tenancy shall terminate if, within three months of the tenant’s death, the lessor does not receive written notification of the fact of death, with a registered death certificate, and of the identity of the subrogate, indicating his relationship to the deceased and offering, where appropriate, a principle of proof that he meets the legal requirements for subrogation. If termination occurs, all those who may succeed the lessee, except those who renounce their option by notifying the lessor in writing within the month following the death, will be jointly and severally liable to pay the rent for those three months.

If the lessor receives several notifications in due time and form whose senders maintain their condition as beneficiaries of the subrogation, the lessor may consider them joint debtors of the obligations of the lessee, as long as they maintain their claim to be subrogated.

  1. In leases whose initial duration is greater than five years, or seven years if the lessor is a legal person, the parties may agree that there is no right of subrogation in the event of the death of the lessee, when the death occurs after the first five years of the lease, or the first seven years if the lessor is a legal person, or that the lease terminates after five years if the death occurred earlier, or after seven years if the lessor is a legal person. In any case, this waiver of the right of subrogation may not be agreed in the event that the persons who may exercise this right by virtue of the provisions of paragraph 1 of this article are in a situation of special vulnerability and affect minors, disabled persons or persons over 65 years of age. Number 4 of article 16 drafted by paragraph eight 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
    CHAPTER III

OF INCOME

Article 17 Determination of income

  1. The rent shall be the one freely stipulated by the parties.

Unless otherwise agreed, payment of the rent shall be monthly and shall be made within the first seven days of the month. In no case may the lessor require the advance payment of more than one month’s rent.

  1. The payment shall be made at the place and by the procedure agreed upon by the parties or, failing this, in cash and in the rented dwelling.
  2. The lessor is obliged to give the lessee a receipt of payment, unless it has been agreed that this is done through procedures that prove the effective fulfilment of the obligation of payment by the lessee.

The receipt or document that replaces it must contain separately the amounts paid for the different concepts that make up the total payment, and specifically, the rent in force.

If the lessor does not deliver the receipt, all expenses incurred by the lessee to record the payment shall be borne by him.

  1. In rental contracts it may be freely agreed by the parties that, for a specified period, the obligation to pay rent may be replaced in whole or in part by the tenant’s undertaking to renovate or rehabilitate the property under the agreed terms and conditions. At the end of the lease, the tenant may in no case request additional compensation for the cost of the work carried out on the property. Failure by the lessee to carry out the works in accordance with the agreed terms and conditions may result in the termination of the lease and the provisions of Article 23(2) shall apply. Number 5 of article 17 introduced by paragraph 11 of the first article of Law 4/2013, of 4 June, on measures to relax and promote the housing rental market (“B.O.E.” 5 June). Validity: 6 June 2013
    Article 18 Updating of income
  2. During the term of the contract, the rent may only be updated by the lessor or the lessee on the date on which each year of validity of the contract is fulfilled, in the terms agreed by the parties. In the absence of an express agreement, no update of income shall be applied to the contracts.

In case of express agreement between the parties on some mechanism for updating monetary values that does not detail the reference index or methodology, the rent will be updated for each annuity by reference to the annual variation of the Competitiveness Guarantee Index on the date of each update, taking as reference month for the update the one that corresponds to the last index that was published on the date of updating of the contract.

In any case, the increase produced as a consequence of the annual update of the income may not exceed the result of applying the percentage variation experienced by the Consumer Price Index on the date of each update, taking as the reference month for the update the one that corresponds to the last index that was published on the date of updating of the contract.

Number 1 of article 18 drawn up by section nine 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

  1. The updated rent shall be payable by the tenant from the month following that in which the interested party notifies the other party in writing, expressing the percentage of alteration applied and accompanying, if the tenant so requires, the appropriate certification from the National Statistics Institute.

The notification made by note in the receipt of the monthly payment of the preceding payment shall be valid.

Article 18 drawn up by section twelve of the first article of Law 4/2013, of 4 June, on measures for making the housing rental market more flexible and promoting it (“B.O.E.” 5 June). Validity: 6 June 2013
Article 19 Rent increases for improvements

  1. The performance by the lessor of improvement works after five years of duration of the contract, or seven years if the lessor is a legal entity, shall entitle him, unless otherwise agreed, to raise the annual rent by the amount resulting from applying to the capital invested in the improvement, the legal interest rate of the money at the time of completion of the works increased by three points, without exceeding the increase of twenty per cent of the income in force at that time.

For the calculation of the capital invested, the public subsidies obtained for the execution of the work must be discounted.

  1. When the improvement affects several properties of a building under horizontal property regime, the lessor must distribute proportionally among all of them the capital invested, applying, for this purpose, the participation quotas corresponding to each of them.

In the case of buildings not owned horizontally, the capital invested shall be distributed proportionally between the properties affected by agreement between the lessor and the lessees. In the absence of an agreement, it shall be distributed proportionally according to the surface area of the leased property.

  1. The increase in rent shall take place from the month following that in which, once the works have been completed, the lessor notifies the lessee in writing of the amount of the rent, detailing the calculations that lead to its determination and providing copies of the documents from which the cost of the works carried out results.
  2. Without prejudice to the provisions of the foregoing sections and to the compensation provided for in Article 22, at any time from the beginning of the term of the rental contract and subject to prior agreement between the landlord and the tenant, improvement work may be carried out on the rented dwelling and the rent of the contract may be increased, without this implying the interruption of the period of compulsory extension established in Article 9 or of tacit extension referred to in Article 10 of this Law, or a new start in the calculation of such periods. In any case, the scope of the improvement works must go beyond the fulfilment of the maintenance duty by the lessor referred to in Article 21 of this Law. Article 19 drafted by paragraph ten 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 20 General and individual service costs

The parties may agree that the general expenses for the adequate maintenance of the property, its services, taxes, charges and responsibilities that are not susceptible to individualization and that correspond to the rented dwelling or its accessories, shall be borne by the lessee.

In buildings owned horizontally, such expenses shall be those corresponding to the leased property according to its participation quota.

In buildings that are not under horizontal property regime, such expenses will be those that have been assigned to the leased property according to its surface area.

In order to be valid, this agreement must be in writing and determine the annual amount of these expenses at the date of the contract. The agreement referring to taxes shall not affect the Administration.

The costs of property management and the formalisation of the contract shall be borne by the lessor, when the latter is a legal entity.

Number 1 of article 20 drawn up by section eleven of article one of the R.D.-law 7/2019, of 1 March, on urgent measures regarding housing and rent (“B.O.E.” 5 March). Effective: March 6, 2019

  1. During the first five years of the term of the contract, or during the first seven years if the lessor is a legal person, the sum to be paid by the lessee for the concept referred to in the previous paragraph, with the exception of taxes, may only be increased, by agreement of the parties, annually, and never by a percentage greater than twice that by which the rent may be increased in accordance with the provisions of Article 18(1). Number 2 of article 20 drawn up by section twelve 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
  2. The expenses for services that the rented property has that are individualized by means of meters will be in any case of account of the hirer.
  3. Payment of the costs referred to in this article shall be credited in the manner provided for in Article 17.4.

CHAPTER IV

THE RIGHTS AND OBLIGATIONS OF THE PARTIES

Article 21 Maintenance of the dwelling

  1. The lessor is obliged to carry out, without the right to raise the rent, all the repairs that are necessary to preserve the dwelling in the conditions of habitability to serve the agreed use, except when the deterioration whose repair is attributable to the lessee in accordance with the provisions of Articles 1.563 and 1.564 of the Civil Code.

The obligation to repair has its limit in the destruction of the dwelling for reasons not attributable to the landlord. For this purpose, the provisions of article 28 shall apply.

  1. When the execution of a conservation work cannot reasonably be deferred until the conclusion of the lease, the tenant shall be obliged to bear it, even if it is very annoying or during it is deprived of a part of the dwelling.

If the work lasts more than twenty days, the rent shall be reduced in proportion to the part of the dwelling of which the tenant is deprived.

  1. The tenant must inform the lessor, as soon as possible, of the need for the repairs referred to in paragraph 1 of this article, for the sole purpose of which he must provide the lessor with direct verification, by himself or by the technicians he designates, of the condition of the dwelling. At any time, and with prior notice to the lessor, he may carry out those that are urgent to avoid imminent damage or serious discomfort, and immediately demand the amount from the lessor.
  2. Small repairs required by wear and tear due to ordinary use of the dwelling will be at the tenant’s expense.

Article 22 Improvement work

  1. The hirer shall be obliged to support the execution by the lessor of improvement works, the execution of which cannot reasonably be deferred until the conclusion of the lease.
  2. A lessor who intends to carry out such works must notify the lessee in writing, at least three months in advance, of the nature, start, duration and foreseeable cost of the works. Within one month of such notice, the tenant may withdraw from the contract, unless the works do not affect the rented dwelling. The lease will expire within two months from the date of withdrawal, during which work may not commence.
  3. The tenant who supports the works shall be entitled to a reduction in rent in proportion to the part of the dwelling of which he is deprived because of them, as well as compensation for the expenses that the works oblige him to carry out.

Article 23 Works of the tenant

  1. The lessee may not, without the written consent of the lessor, carry out works that modify the configuration of the dwelling or the accessories referred to in Article 2(2). In no case may the lessee carry out works that cause a decrease in the stability or security of the dwelling.

Without prejudice to the right to terminate the contract, the lessor who has not authorised the work to be carried out may, at the conclusion of the contract, require the lessee to restore things to their previous state or to retain the modification made, without the lessee being able to claim any compensation.

If, despite the provisions of paragraph 1 of this article, the tenant has carried out work that has led to a decrease in the stability of the building or the security of the dwelling or its accessories, the lessor may immediately require the tenant to return the property to its previous state.

Article 23 drawn up by paragraph fifteen of the first article of Law 4/2013, of 4 June, on measures to make the rental housing market more flexible and to promote it (“B.O.E.” 5 June). Validity: 6 June 2013


Article 24 Disabled tenants

  1. The tenant, with prior written notification to the landlord, may carry out inside the dwelling those works or actions necessary for it to be used appropriately and in accordance with the disability or age of more than seventy, both of the tenant himself or his spouse, of the person with whom he or she lives permanently in a similar affective relationship, regardless of his or her sexual orientation, or of his or her relatives who live permanently with any of them, provided that they do not affect the common elements or services of the building or cause a decrease in its stability or security.
  2. The tenant shall be obliged, at the end of the contract, to restore the dwelling to its previous state, if so required by the landlord. Article 24 drafted by paragraph sixteen of the first article of Law 4/2013, of 4 June, on measures to relax and promote the housing rental market (“B.O.E.” 5 June). Validity: 6 June 2013
    Article 25 Pre-emptive right of acquisition
  3. In the event of the sale of the rented dwelling, the lessee shall have a preferential right of acquisition over the same, under the conditions set out in the following sections.
  4. The tenant may exercise a right of first refusal over the rented property within a period of thirty calendar days, counting from the next day on which he is notified in a reliable manner of the decision to sell the rented property, the price and the other essential conditions of the transfer.

The effects of the notification provided for in the preceding paragraph shall expire one hundred and eighty calendar days thereafter.

  1. In the case referred to in the preceding paragraph, the tenant may exercise the right of withdrawal, subject to the provisions of Article 1.518 of the Civil Code, when he has not been given the notification or has omitted any of the requirements, as well as when the effective price of the sale is lower or its other essential conditions are less onerous. The right of retraction shall expire thirty calendar days from the date following the notification that the purchaser must faithfully make to the lessee of the essential conditions in which the sale was made, by means of delivery of a copy of the deed or document in which it was formalized.
  2. The tenant’s right of pre-emption or withdrawal shall take precedence over any other similar right, except for the withdrawal recognised for the owner of the dwelling or the conventional right registered in the Land Registry at the time of conclusion of the rental contract.
  3. In order to register in the Land Registry the titles of sale of rented dwellings, it must be justified that the notifications foreseen in the previous sections have taken place in their respective cases, with the requirements demanded therein. When the property sold was not rented, in order for the purchase to be registered, the seller must declare this in the deed, under penalty of falsehood in a public document.
  4. When the sale falls, in addition to the rented dwelling, on the other objects rented as accessories to the dwelling by the same landlord referred to in Article 3, the tenant may not exercise the preferential acquisition rights over the dwelling alone.
  5. There is no right of pre-emption when the rented dwelling is sold together with the other dwellings or premises owned by the landlord which form part of the same building, nor when all the apartments and premises of the building are sold together by different owners to the same purchaser. In such cases, the legislation on housing may establish the right of first refusal and retraction, with respect to the entire property, in favour of the body designated by the competent Administration in matters of housing, the provisions of the previous sections being applicable for the purposes of notification and exercise of such rights.

If there is only one dwelling in the property, the tenant shall have the pre-emption and pre-emption rights provided for in this article.

Number 7 of article 25 drawn up by section thirteen of the first article of the R.D.-law 7/2019, of 1 March, on urgent measures regarding housing and rent (“B.O.E.” 5 March). Effective: March 6, 2019

  1. Notwithstanding the provisions of the preceding paragraphs, the parties may agree that the lessee renounces the right of preferential acquisition.

In the cases in which this waiver has been agreed, the lessor must notify the tenant of his intention to sell the dwelling at least thirty days before the date of formalisation of the contract of sale.

Number 8 of article 25 drawn up by section seventeen 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.
CHAPTER V

SUSPENSION, TERMINATION AND EXTINCTION OF THE CONTRACT

Article 26 Habitability of the dwelling

When the execution in the rented dwelling of conservation works or works agreed by a competent authority make it uninhabitable, the tenant shall have the option of suspending the contract or withdrawing from it, without any compensation.

The suspension of the contract will mean, until the completion of the works, the suspension of the term of the contract and the suspension of the obligation to pay rent.

Article 27 Breach of obligations

  1. The breach by either party of the obligations resulting from the contract shall entitle the party that has fulfilled its obligations to demand performance of the obligation or to promote the termination of the contract in accordance with the provisions of Article 1.124 of the Civil Code.
  2. In addition, the lessor may terminate the contract for the following reasons:

a) Failure to pay the rent or, as the case may be, any of the amounts for which payment has been assumed or corresponds to the lessee.
b) Failure to pay the amount of the deposit or to update it.
c) Inconsensual subleasing or assignment.
d) Damage caused maliciously to the property or works not consented to by the lessor when the latter’s consent is necessary.
e) When disturbing, unhealthy, harmful, dangerous or illicit activities take place in the dwelling.
f) When the dwelling ceases to be primarily intended to satisfy the permanent housing needs of the tenant or of the person who actually occupies the dwelling in accordance with the provisions of article 7.

  1. Similarly, the tenant may terminate the contract for the following reasons:

(a) failure by the lessor to carry out the repairs referred to in Article 21.
b) Disruption of the landlord’s legal or factual use of the dwelling.

4. In the case of urban property leases registered in the Land Registry, if it has been stipulated in the contract that the lease will be terminated due to non-payment of rent and that in this case the property must be returned immediately to the lessor, the resolution will take place as of right once the lessor has judicially or notarially summoned the lessee at the domicile designated for the purpose in the registration, urging him to payment or compliance, and he has not responded to the summons within ten working days, or responds by accepting the resolution as of right, all by means of the same judge or notary who made the summons.

The title contributed to the registry procedure, together with the copy of the act of request, of which the notification results and which has not been answered by the required payment or which has been answered by accepting the resolution of full right, will be sufficient title to practice the cancellation of the lease in the Property Registry.

If there are subsequent charges that fall on the lease, it will also be necessary for its cancellation to justify the reliable notification to the owners of the same, at the address that works in the Registry, and prove the consignment in their favor before the same notary, of the deposit provided by the tenant.

Number 4 of article 27 introduced by paragraph eighteen of the first article of Law 4/2013, of 4 June, on measures to relax and promote the housing rental market (“B.O.E.” 5 June). Validity: 6 June 2013
Article 28 Termination of tenancy

In addition to the other causes contemplated in this Title, the lease contract shall be terminated for the following reasons:

a) For the loss of the leased property for reasons not attributable to the lessor.
b) For the firm declaration of ruin agreed by the competent authority.

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Spanish Urban Rental Law 2019. Titel I. Scope of the law

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Article 1 Scope of application

This Act establishes the legal regime applicable to the leases of urban properties intended for housing or uses other than housing.

Article 2 Leasing of housing

  1. A housing lease is a lease on a habitable building whose primary purpose is to satisfy the permanent housing need of the tenant.
  2. The rules governing the rental of housing shall also apply to furniture, storerooms, parking spaces and any other premises, rented spaces or services provided as accessories to the property by the landlord himself.

Article 3 Leasing for uses other than housing

  1. A lease for a use other than that of a dwelling is considered to be a lease which, falling on a building, has as its primary purpose a purpose other than that established in the previous article.
  2. In particular, this consideration shall apply to the leases of urban estates celebrated during the summer season or any other season, and to those celebrated for the exercise of an industrial, commercial, craft, professional, recreational, welfare, cultural or educational activity on the estate, regardless of the persons who celebrate them.

Article 4 Applicable regime

  1. The leases regulated in this Law shall be subject to the provisions of Titles I and IV of this Law and to the provisions of the following sections of this article.
  2. Respecting what is established in the previous section, housing leases shall be governed by the agreements, clauses and conditions determined by the will of the parties, within the framework of what is established in Title II of this law and, supplementarily, by the provisions of the Civil Code.

Exceptions to this provision shall be made for the rental of dwellings whose surface area exceeds 300 square metres or in which the initial annual computed rent exceeds 5.5 times the minimum annual computed interprofessional wage and the rental corresponds to the entire dwelling. These leases shall be governed by the will of the parties, failing that, by the provisions of Title II of this law and, supplementarily, by the provisions of the Civil Code.

Number 2 of article 4 drafted by paragraph one of article one of the first article of R.D.-law 7/2019, of 1 March, on urgent measures in the field of housing and rent (“B.O.E.” 5 March). Effective: March 6, 2019

  1. Without prejudice to the provisions of paragraph 1, leases for use other than housing are governed by the will of the parties, failing that, by the provisions of Title III of this Act and, supplementarily, by the provisions of the Civil Code.
  2. The exclusion of the application of the precepts of this law, when this is possible, must be done expressly with respect to each of them.
  3. The parties may agree to submit to mediation or arbitration those disputes which by their nature can be resolved through these forms of dispute resolution, in accordance with the provisions of the legislation regulating mediation in civil and commercial matters and arbitration.
  4. The parties may indicate an electronic address for the purposes of making the notifications provided for in this law, provided that the authenticity of the communication and its contents is guaranteed and there is a reliable record of the complete transmission and reception and of the time at which they were made. Article 4 drafted by paragraph one of the first article of Law 4/2013, of 4 June, on measures to relax and promote the rental housing market (“B.O.E.” 5 June). Validity: 6 June 2013
    Article 5 Excluded leases

They are excluded from the scope of application of this law:

a) The use of the dwellings that porters, guards, salaried employees and civil servants are assigned by reason of the position they hold or the service they render.
b) The use of military housing, whatever its qualification and regime, which shall be governed by the provisions of its specific legislation.
(c) Contracts in which, when a farm with a house-room is leased, the primary purpose of the lease is the agricultural, livestock or forestry use of the land. These contracts shall be governed by the provisions of the applicable legislation on rustic leases.

d) The use of university housing, when it has been expressly qualified as such by the University itself which owns or is responsible for it, which is assigned to the students enrolled in the corresponding University and to the teaching and administrative staff and services dependent on it, by reason of the link established between each of them and the respective University, which will be responsible in each case for establishing the rules to which its use will be subject.
e) The temporary cession of use of the totality of a furnished and equipped dwelling in conditions of immediate use, commercialized or promoted in tourist offer channels or by any other means of commercialization or promotion, and carried out with lucrative purpose, when it is subject to a specific regime, derived from its tourist sector regulations.

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Spanish Urban Rental Law 2019. Preamble

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1

The legal regime for urban leases is currently regulated by the Revised Text of the 1964 Urban Leases Act, approved by Decree 4104/1964 of 24 December.

The principles that inspired the reform of the leasing legislation carried out in 1964, according to the Exposition of Reasons of Law 40/1964, were to temper the liberalizing movement of urban property to the economic circumstances of the country and the demands of justice. However, the recast text failed to achieve its objectives of unblocking the situation of frozen incomes. The text also enshrined a system of subrogations, both “inter vivos” and “mortis causa”, favourable to the interests of the tenant.

These two circumstances created a regulatory framework which, in practice, showed little encouragement for the use of the leasing institute.

Under these circumstances, Royal Decree-Law 2/1985, of 30 April, on Economic Policy Measures, introduced two modifications to the regulation of the regime of urban leases that have had an enormous impact on the subsequent development of this sector. These modifications were the freedom to transform housing into business premises and the freedom to agree on the duration of the contract, eliminating the mandatory nature of the forced extension in urban lease contracts.

Royal Decree-Law 2/1985 has had mixed results. On the one hand, it has allowed the downward trend in the percentage of rented housing that was occurring in the early 1980s to come to a halt, although it has not been able to substantially reverse the sign of the trend. On the other hand, however, it has generated enormous instability in the rental housing market by giving rise to a phenomenon of short-term contracts. This in turn has produced a very significant increase in rents, which has been aggravated by its simultaneity in time with a period of rising prices in the real estate market.

At present, the market for urban housing leases is characterised by the coexistence of two clearly differentiated situations. On the one hand, the contracts entered into under Royal Decree-Law 2/1985, which represent approximately 20 per cent of the total and are characterised by high incomes and a significant degree of occupational rotation as a result of their generalized annual duration. On the other hand, contracts entered into prior to the effective date of Royal Decree-Law 2/1985. In general, these are contracts with low incomes and, in the case of contracts entered into prior to the 1964 Law, approximately 50% of the total, with incomes that may be classified as uneconomic.

The dysfunctions that this situation generates in the market are such that they have made leasing an unattractive alternative to the acquisition of property in relation to the solution to the housing problem. In this sense, only approximately 18 per cent of the total housing stock is rented.

For this reason, the ultimate aim of the reform is to contribute to strengthening the urban rental market as a basic part of a housing policy oriented by the constitutional mandate enshrined in article 47, recognising the right of all Spaniards to enjoy decent and adequate housing.

The achievement of this objective requires a regulatory modification that allows an adequate balance to be established in the services provided by the parties, and although it is evident that the regulatory change in itself is not a sufficient condition to strengthen the offer in this sector, it is a necessary condition for this to take place.

The substantive regulation of the leasing contract must be based on a clear differentiation of treatment between housing leases and those intended for any use other than housing, since it is understood that the underlying economic realities are substantially different and deserve, therefore, dissimilar regulatory systems that reflect that difference.

In this sense, at the same time as the tuitive nature of the regulation of housing leases is maintained, a regulation based absolutely on the free agreement of the parties is chosen in relation to those destined for other uses.

In addition, the law contains a partial reform of the regulation of leasing processes and the modification of the system of contracts currently in force.

The regulation of housing leases presents significant novelties, fundamentally in relation to their duration. In this sense, it has been decided to establish a minimum term of the contract of five years, because it is understood that a term of these characteristics allows a certain stability for the family units that allows them to contemplate the lease as a valid alternative to the property. At the same time, it is not an excessive period that could constitute a brake for both private owners and business developers to place housing in this market.

This minimum period of duration is articulated from the free agreement between the parties on the initial duration of the contract plus a system of obligatory annual extensions until reaching the minimum of five years of duration, if the initial agreement had been for a shorter period.

The law also introduces a mechanism for tacit renewal, after at least the five-year guarantee period has elapsed, which gives rise to a new period also articulated over annual periods of three years.

The recognition of the existence of situations that require shorter terms of duration has led the law to provide for this possibility, although linked exclusively to the need, known at the time of the conclusion of the contract, to recover the use of the rented dwelling for the landlord’s own home.

The establishment of a limited term allows to mitigate the impact that the institute of subrogations could have on the balance of benefits. To the extent that the right of subrogated persons to continue to use the rented dwelling is only maintained until the end of the contractual term, there is no inconvenience in maintaining this right in the area of “mortis causa” in favour of those persons directly linked to the tenant. A novelty is the recognition of this right to the “more uxorio” cohabitant.

In relation to “inter vivos” subrogations, their existence is only recognised with the prior written consent of the lessor. At the same time, a novelty is introduced in cases of judicial decisions which, in nullity, separation or divorce proceedings, assign the dwelling to the non-owner spouse. In these cases, this spouse is recognized “ex lege” the right to continue in the use of the rented housing for the time remaining from the contract.

The regime of rents is built around the principle of freedom of agreement between the parties for the determination of the initial rent both for new contracts and for those that are maintained with already established tenants. This will ensure, where necessary, that contract rents reflect market reality, if this reality could not have been transferred to the rent by means of the planned updates. This may be the case, given that the regulation establishes a mechanism for updating incomes linked to the percentage variations that the Consumer Price Index may experience in an annual period.

With regard to the rights and obligations of the parties, the law broadly maintains the current regulation, without introducing major new features. The exception is the establishment of a special provision for tenants affected by disabilities or with disabled persons under their care, who intend to make modifications to the leased property that will allow them to improve its use.

The tenant also retains the right of preferential acquisition in the event of the sale of the rented dwelling during the term of the lease, even though it refers to market conditions, since it is understood to be an instrument which, without entailing a serious charge for the lessor, increases the tenant’s chances of remaining in the dwelling.

Finally, with regard to the formalization of contracts, the law maintains the freedom of the parties to choose the oral or written form. At the same time, the possibility is expressly enshrined of all lease contracts, whatever their duration, to access the Land Registry, attempting, on the other hand, to enhance this possibility of access by linking certain incentive or benefit measures to the fact of registration. This fact not only contributes to reinforcing the guarantees of the parties, but also increases the information available to the State, allowing it to design and implement those measures that may contribute to improving the regulation and practice of leases.

The law abandons the traditional distinction between housing leases and leases of business premises and similar premises in order to differentiate between housing leases, which are those dedicated to satisfying the permanent housing needs of the tenant, his or her spouse or dependent children, and leases for uses other than housing, a category that encompasses second home leases, seasonal leases, traditional business premises leases and leases similar to these.

This new categorism is based on the idea of granting protection measures to the tenant only where the purpose of the lease is to satisfy the housing needs of the individual and his family, but not in other cases in which economic, recreational or administrative needs are satisfied.

To this end, in the regulation of leases for uses other than housing, the law opts to leave all elements of the contract to the free agreement of the parties, configuring a supplementary regulation of the free agreement that also allows ample recourse to the regime of the Civil Code.

The regime of obligations of conservation and works, the right of preferential acquisition, the right of transfer and the subrogations “mortis causa”, although limited to the spouse and children of the lessee who continue the activity, are regulated in this way as a supplement to the express will of the lessor and lessee.

This regulation introduces a novelty consisting of the tenant’s right to compensation when, wishing to continue with the lease, the tenant has to leave the premises for the expiry of the scheduled term, provided that in some way the lessor or a new tenant could benefit from the clientele obtained by the former tenant, or alternatively, from the transfer costs and damages arising therefrom, when the tenant is obliged to relocate his activity.

The rent deposit maintains its obligatory character, both in housing and in different use, fixing its amount in one or two monthly rent, depending on whether it is renting housing or different use. At the same time, Autonomous Communities with competence in housing matters are allowed to regulate their compulsory deposit in favour of the Community itself, since the income generated by these funds has been revealed as an important source of financing for autonomous housing policies, which should be maintained.

In the regulation of leasing processes, it is established that the competence to hear controversies corresponds, in any case, to the First Instance Judge of the place where the urban property is located, excluding the possibility of modifying the functional competence by means of express or tacit submission to a different Judge.

This does not preclude the possibility that the parties in the legal relationship may agree, for the solution of their conflicts, the use of the arbitration procedure.

The processing of lease proceedings is deferred to the judgment of cognition, expressly waiving the application of the judgment of eviction and verbal judgment when actions are taken, in the latter case, to determine rents or amounts to be paid to the tenant.

It also regulates the conditions under which the tenant may serve the action in evictions promoted by the failure to pay amounts due by virtue of the rental relationship. This regulation significantly qualifies the possibilities of enervation and rehabilitation contained in the rewritten text of 1964.

In cases of accumulation of shares, together with the traditional regulation, the possibility of accumulation has been established, which assists the lessees when the exercised actions are based on common facts and are directed against the same lessor. The latter is also allowed in the event of termination of the contract due to non-payment, the cumulative and simultaneous exercise of the action for termination of the contract and the claim for the amounts owed.

Finally, and as the most significant novelty of the law in procedural matters, the regulation of the cassation appeal in leasing matters is established because it is understood that the matter, given its importance and the transcendence of the normative changes that this law introduces, should be able to be the object of a jurisprudential doctrine elaborated in the headquarters of the Supreme Court. As further characteristics of the cassation appeal, the following may be noted: only judgments rendered in the proceedings followed by the cognition trial shall be subject to such appeal, provided that the first and second instance judgments are not in conformity, and the income of the contracts is below the limits established by law

With regard to the contracts existing at the entry into force of this law, those entered into under Royal Decree-Law 2/1985 do not present a special problem since it was the free will of the parties that determined the relationship regime in terms of duration and income. Therefore, these contracts will continue until their extinction, subject to the same regime as until now. At that time, the new lease relationship that may be constituted on the property will be subject to the new regulations. This regulation does not exempt contracts that, although dated after May 9, 1985, have been entered into subject to the system of forced extension, as this derives from the free agreement between the parties.

With regard to contracts entered into previously, the law opts for a solution that attempts to combine the greatest possible simplicity with a balanced treatment of the different situations in which the conflicting parties find themselves. For this reason, an approach is introduced that maintains the criterion of differentiated treatment between contracts for the rental of housing and business premises, granting softer conditions for the modification of the tenant of the dwelling than that of the business premises.

Taking into account the detrimental effects of the prolonged validity of the mandatory extension imposed by the 1964 Law, the need to limit the duration of this mandatory extension is addressed by re-establishing the temporality of the tenant relationship in accordance with its own nature, but this modification is made taking into account the social and economic effects of the measure taking into consideration the personal and family situation and the economic capacity of the tenants.

In this sense, in the renting of dwellings, the total suppression of “inter vivos” subrogation is opted for, except for that derived from a judicial decision in matrimonial proceedings, and for the gradual suppression of the rights of subrogation “mortis causa” that the recast text of 1964 recognized.

As this measure affects situations where the potential contents of rights are different, initial tenants, first subrogation tenants and second subrogation tenants, the rule must provide adequate answers for each of them. Hence, the suppression of subrogation is all the more gradual the greater the potential content of rights that the law contemplates for each case, starting from the general principle of keeping the current tenant and his spouse the right to continue in the use of the rented housing until his death, where this right was recognized by the legislation of 1964.

As for the system of rents, the law chooses to try to unblock the situation of frozen rents. To this end, a revision system was established, applicable to all contracts prior to 9 May 1985, with the aim of recovering variations that had not been affected by inflation since the date of conclusion of the contract or since the last legal revision, as the case may be. This revision does not take place immediately but gradually, increasing the number of years in which the total revision takes place in inverse function of the rent of the lessee, making it possible for lessees of lower economic level to adapt their economies to the new reality.

In the case of tenants with a low level of income, below two and a half times, three or three and a half times the minimum interprofessional salary depending on the number of people living in the rented dwelling, the review of the rents is excluded and the Government is instructed to set up, within one year from the entry into force of the law, a compensation mechanism of a fiscal nature for those lessors who have not been able, due to the aforementioned circumstances, to update the rents.

Likewise, lessors are granted the right to enjoy benefits in the Wealth Tax, in the Real Estate Tax, in the expenses of conservation of the leased property and the cost of the services and supplies enjoyed by the leased dwelling, in the latter three cases by charging their amounts to the lessees.

In the case of leases of business premises, the decision was made to establish a timetable for the temporary termination of these contracts, although a distinction was made between leases in which the lessee is a natural person and those in which the lessee is a legal person, presuming greater economic solvency where the organisational framework is more complex.

For this reason, “mortis causa” subrogation rights are maintained, albeit on a limited basis, in the first case, guaranteeing the family group linked to the development of the activity a minimum term of twenty years, which may be exceeded as long as the lessee and his or her spouse live and continue the exercise of the activity that has been developed in the premises.

In the case of leases of legal entities, resolution periods of between five and twenty years are set, depending on the nature and volume of the activity carried out in the leased premises. A short term is set for leases in which activities with such economic potential are carried out that the holders of these contracts are placed in a position of equilibrium vis-à-vis the lessors when negotiating new lease conditions.

With regard to the rent paid in these contracts, the revision scheme established for housing leases is reproduced, temporarily graduating the rhythm of the revision according to the categories described above.

In order to favour the continuity of the tenants, the law regulates a newly created figure which is the preferential rental right, which grants the tenant a preferential right to continue in the use of the rented premises at the time of the termination of the contract, as opposed to any third party under market conditions.

A right to compensation is also provided in the event of not continuing to use the leased premises when another person, whether the owner or a new tenant, can benefit from the clientele generated by the activity of the former tenant.

As regards similar leases, both the tenancy and the business premises, they are treated in a similar way to business premises leases, in terms of duration and rental regime.

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NIE Number in Mallorca

To buy a property in Mallorca (or elsewhere in Spain) you need to get a NIE number.

In order to get it I need to hold your passport for 1 hour or get a Notarial Copy with the La Haye apostille of it.

Who can order the NIE in Mallorca?


Foreigners who, because of their economic, professional or social interests, are related to Spain, will be given, for identification purposes, a personal, unique and exclusive sequential number.

What is the NIE number?

The personal number shall be the foreigner’s identifier, which must appear on all documents issued or processed, as well as the formalities stamped on his identity card or passport.

How to apply for the NIE number?


A) In person at the police offices

B) Through a representative
Lawyers with an authorization and a certified copy of the passport can apply to NIE on behalf of their clients.

Documents required to apply for NIE

1.- This application duly completed and signed

2.- Original and copy of the complete passport, or identity document.
Written explanation of the economic, professional or social reasons justifying the NIE application.

3.- Power of attorney of the representative to request it.

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.

A Certificate of Habitability does not mean that the dwelling is legal.


Lately I have noticed that it is being implied that if the property has a Certificate of Habitability (Cédula de Habitabilidad) it means that it is legal.
This is not always the case.

Having a certificate of habitability is not synonymous with urban legality.


-In the case of a new construction, this building must have the certificad of end of works granted by the municipality and therefore have proven its legality to obtain the certificate of habitability.
-However, a house built illegally 15 or 20 years ago that does not have an open urban infraction file may obtain the cédula and still not be legal.
-In the same way a house can have the cédula for 20 years and have become illegal after having obtained it.

The Certificate of Habitability is a certificate issued by the Consell de Mallorca that certifies that the property is habitable. A dwelling can meet the conditions to live in it and still be illegal.

WHERE’S THE PROBLEM?


If the property has a cédula de habitatilidad, have water and electricity and therefore I can live in it, it doesn’t matter if it is not legal. Isn’t it?

Imagine a house that was built illegally 20 years ago and yet the urban infraction has expired.
In this case the administration cannot force you to demolish the illegal parts.
However NEVER WILL AUTHORIZE TO MAKE REFORMS IN THE HOUSING.
You will not be able to apply for a licence to repair leaks, nor will you be able to change the floor, the kitchen or the bathroom.
You will have to choose between:
a) Allow the house to deteriorate
b) Do illegal works. In that case the prescription is interrupted and the administration can force you to demolish the illegally built as well as fine you.

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.