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7 Things to Consider - Renewing a Rental Contract

7 Things to Consider - Renewing a Rental Contract

06 08 - 2018

rental-contracts-information-tenerife-spain

 

1. Extensions

The duration of the rental contract can be agreed freely by othe wners and tenants. However, this autonomy of will is limited by the existence of an OBLIGATORY annual extension for the LANDLORDS and VOLUNTARY for the TENANTS. In this regard,  the reform of the Law of Urban Leases states that new contracts under three years, "Will be mandatorily extended for annual periods until reaching [3 years]."

However, in both cases it is a privilege that the tenant has, who can decide whether or not to continue with the lease of the property.

Once the initial duration periods have elapsed, "If neither party notifies the other of its will not to renew it" in the case of contracts signed prior to the LOU reform, the document it will be extended, "Obligatorily for annual terms up to a maximum of three more years". On the other hand, contracts signed as of June 6, and after at least three years of contract duration, "If neither party has notified the other of its willingness not to renew it", the document will be extended one more year .

 

2. Deadlines to take into account

In the event that one of the parties does not wish to extend the contract, it has certain deadlines to communicate the decision. These deadlines may or may not be stated in the rental contract. Many contracts do not state the deadlines, which is why they must be governed by what the current legal regulations affirm.

In this sense, the LAU establishes that the parties have a period of 30 days before the expiration date, "To notify the other of their willingness not to extend the contract". A communication that must be carried out in a reliable manner in such a way that there is a written record of the will to terminate the contract. However, if the contract stated, for example, 2 months notice should be given, then this would be the enforceable deadline required by both tenant and landlord.


3. Reasons not to renew a contract

The owners of a property have do have reasons not to extend a contract. You can also justify reasons for adaptation or cession of the property for your spouse, "In cases of final judgment of separation, divorce or marriage annulment." This communication, "Must be made at least two months in advance" by the landlord.
 

4. Tenants desisting from the rental contract

On the other hand, the tenants can also proceed to desist from the rental contract. This situation occurs,  "When the tenant communicates to the landlord his desire not to continue in that rental house" before reaching the contractual due date. For this intention to be carried out, at least six months must have elapsed since the signing of the document, "Provided that the landlord is notified at least 30 days in advance."

In case of withdrawal, "The tenant must compensate the lessor with a certain amount". This money is usually the equivalent of a monthly payment of the rent in effect for each year of the contract that remains to be fulfilled.

 

5. Steps to consider in the renovation

When the tenants do not make use of the power of withdrawal from the rental contract and the extensions of the lease have expired (having lapsed 3 years), it is what the experts call, "Tacit renewal of the lease". Under these conditions, a new contract is generated with the same characteristics as the one that ends, except for the features related to the duration of the rental.

This is regulated by the Civil Code and for that application to be effective it is necessary that two requirements are met. In the first place, that at the end of the current lease contract, the landlord does not inform the lessee of his intention not to continue with the rental agreement. Also, the tenant must enjoy a minimum of fifteen days the leased property.

 

6. Individuals of the new contract

By law, any long term rental agreement can legally be for 3 years. However, landlord and tenant can agree that the contract has a shorter duration, leaving, "The will limited by the existence of a mandatory annual extension for the landlord and voluntary for the tenant," which will be extended to date. For this reason, 30 days notice will still need to be given by the tenant.

After the first three years of the contract, a new tacit extension operates for another year. This condition is materialized if neither of the parties communicates to the other, one month in advance their willingness not to renew the contract.

 

7. Recommendations

Any communications on compliance with the contract should be made in writing in a reliable manner. Specifically, to comply with the notice periods indicated in the contract or, failing that, in the law. Similarly, take heed of the importance of clear records of the will of all parties, because otherwise, if you have to take legal action before a possible eviction due to expiration of the contract, you will need to prove it before the courts.

Attention must also be given to the clauses that will be incorporated into the rental agreement - correctly identifying the leased property, as well as the amount of rent and things such as whether or not he wants to include a clause that refers to the annual review of the rentl price according to the CPI (price index) and who should carry out the relevant maintenance and payment of utility bills.

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  • Tenerife International Business Centre SL
  • Calle Cándida Peña Bello 8
  • 38631 Las Galletas (Santa Cruz de Tenerife)
  • 922 730 210
  • 0034 637 838 718

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