Law 4/2013, of June 4, on measures to make the housing rental market more flexible and promote, has modified Law 29/1994 of November 24, which is the one that establishes the general regime for urban property rentals. . The modifications introduced are applicable to lease contracts that are entered into from the entry into force of the law, which, as usual, is the day after its publication in the BOE. In other words, since June 6, 2013, the modifications that we are going to list below are in force.
The purpose of the law is to promote the rental of homes and this objective is intended to be achieved through the following measures: making the applicable regime more flexible, giving greater weight to the will of the parties to determine the rights and obligations arising from the lease; modifying the minimum lease term; favoring the right to recover the home by the owner; empowering the lessee to withdraw from the lease; providing for the possibility of submitting possible disputes to mediation or arbitration; regulating electronic notifications; introducing the so-called EXPRESS EVICTION, the possibility of agreeing that the payment of the rent can be replaced by the commitment to reform or rehabilitate the property; setting the conditions for rent updating, the possibility of waiving the right of withdrawal; and creating a registry of delinquent tenants.
Of all these topics I want to refer to three issues, some for their especially informative interest and another for their practical importance, since being a technical issue it is very possible that it makes us rethink how we carry out a lease.
The first two questions to which we want to refer are the duration of leases and the increase in rent.
In accordance with article 9 of the urban leases law, the contracts that are entered into after the entry into force of law 4/2013, will have the duration agreed by the parties, but if this duration is less than three years, when the on the expiration date of the contract, it will be mandatorily extended for annual installments until the lease reaches a minimum duration of three years, unless the lessee informs the lessor at least thirty days before the date of termination of the contract or any of the extensions, his will not to renew it.
Therefore, there is a two-year reduction of the so-called forced extension, which the 1994 law had established in five years.
Regarding the update of the income, as a great novelty we can highlight that the update of the income may be agreed to be different from the CPI, being able to agree on other reference indices, a fixed rate or even no increase. In the regulation of the Urban Leasing Law in its original text, it could only be updated subject to the CPI and a higher rate could not be established.
The second question to which we are going to refer is the one referring to the registration of the lease in the Land Registry. Pursuant to article 7 of the urban leases law, it is established that in any case, in order for the leases arranged on urban properties to take effect against third parties who have registered their right, said leases must be registered in the Property Registry. The new legal wording is more respectful of the essential registration principles of non-enforceability against third parties of unregistered rights (Art 32) and protection of third parties in Article 34 of the Mortgage Law.
But what does all this mean in a less technical language? Well, that is what we are going to try to explain, putting ourselves both in the position of the lessor and the lessee.
Let's imagine that we are tenants of an urban property, and the owner of the same sells it or ceases to be the owner, for example, for having acquired the house charged to a mortgage and that due to non-payment it ends up being awarded by the Bank or the creditor . Well, in such cases, the tenant's right will be extinguished. Always? No, because if the rental contract is registered in the Property Registry, prior to the determining rights of the resolution of the landlord's right, the new acquirer must respect the duration of the lease as agreed and registered in the Registry of the property. On the contrary, if the lease is not registered or is registered after the rights that may cause the termination of the lessor's right, the lease is terminated and the property must be abandoned.
With this we do not mean that it is a danger not to have the lease contract registered in the Land Registry. But in those cases in which it is about leases of commercial premises or in general of farms in which the lessee is going to make a significant investment, for works, or in which a long loss of duration is established, it is highly recommended, in the first place. First, analyze the situation of the property before signing the contract, regarding the state of charges, because if there is a mortgage or any cause that could determine the extinction of the right of the owner, it would affect the lessee and secondly register the lease, in anticipation that priority will be given to everything that the owner of the property can do after the lease.
On the other hand, the new law strengthens the position of the landlord in the case of urban property leases registered in the Property Registry, since if the contract had stipulated that the lease will be terminated due to non-payment of rent and that in such a case the property must be returned immediately to the landlord, the resolution will take place by operation of law once the landlord has judicially or notarially requested the tenant at the address designated for this purpose in the registration, urging payment or compliance, and the latter has not responded to the request within the following ten business days, or responds accepting the resolution in full right, all through the same judge or notary who made the request.
In other words, an abbreviated procedure is established to ensure that the lease has been terminated. But with this procedure, without denying the usefulness of the reform, it does not resolve an issue that is the abandonment of the property by the tenant, which would force us in the event of refusal to go to legal proceedings to obtain eviction.