Rental Agreement Template

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rental agreement template

Details of Spanish Rental Agreement Contracts

The popularity of purchasing a buy-to-let property along the coastal resort towns in Spain has lead to a variety of misunderstandings and general confusion regarding the rights of owners and tenants. Understanding Spanish rental contracts can assist with both owners and tenants to know the extent of their rights and obligations.

The extensive number of English speaking expats along the coastal resort areas has lead many tenants and landlord creating contracts in English. It should be noted that difficulties may be faced when using an English language contract, especially if any issues need to be bought to the attention of lawyers or the courts. Requesting a Spanish language contract is highly advisable and if the tenant or owner does not understand what is in the contract, going through the details with a lawyer, hired translator or trusted friend fluent in Spanish, will assist with full comprehension of the details.

Details that all rental agreement contracts need to cover include the full names of the property owners and the tenant, along with their identification numbers and the address of the property. The contract will also need to include the length of the rental agreement and the amount of the rental payments. There are many other areas that both landlords and tenants should ensure are covered in the contracts to avoid future issues, rather than agree upon verbally. In fact, verbal agreements tend to cause the majority of problems which can be avoided by considering everything that may affect each party in the short and long term.

Understanding the content contained in Spanish rental contracts can assist tenants to know their rights. Variations exist between long and short term contracts as the tenancy conditions are distinctive. Although the law in Spain is predominantly pro-tenant, fewer rights are provided to short term tenants in comparison to long term tenants.

Short Term Rental Agreement Contracts

These contracts are most commonly used for holiday lettings for a number of weeks to a few months. The short term rental agreement contracts can be renewed for up to a maximum of 1 year before the tenants are to be removed from the property. Short term rentals are usually more expensive, benefitting the owners, yet in some locations creating difficulties for tenants searching for long term rentals during the summer months.

Long Term Rental Agreement Contracts

The length of a long term contract in Spain is normally for a renewable term of 11 months. These contracts are automatically renewable for up to 5 years, unless the owner of the property informs the tenant that the property will be required for personal use. At the end of the 5 year term, if the owner has not provided the tenant with one month’s prior notification to vacate the property, the contract is automatically renewed for up to 3 years. Due to the rent control laws in Spain, the payments can only changed to accommodate inflation and not at the owner’s discretion.

Security Deposits

The deposits will be paid directly to the owner of the property upon signing the contract and is held in lieu of damages and non payment of rent, to be returned at the termination of the contract. According to the law for urban letting, deposits should be kept to a minimum, such as the equivalent of one month’s payment. If the property is unfurnished, only one month’s rent for the deposit can be requested, although for commercial and furnished properties, up to two months can be requested. For the first five years of a contract, the rent can be reviewed on an annual basis and these updates should be in accordance with the variations of the Consumer Price Index.

Rental Payments

When paying rentals, the owner is expected to provide a receipt for payment, unless the payments are made through direct bank transfers. The monthly payments of rent should be paid in accordance with the stipulations in the rental contract. The rental contract should clearly state the time frame of the due date for the payments, such as between the 1st and the 5th of each month.

Bill payments need to be clearly stated in the contract to ensure the obligations are understood. This will include water, electricity and any other bills relating to the use of the property. Bills such as community fees must be paid by the owner of the property, unless it is clearly stated otherwise in the rental contract. If the contract implies that the tenant is required to pay the community fees, it is usually negotiable.

References and Guarantees

Prior to entering into a rental contract, the owner of the property may request some references to ensure the person intending to rent their property is of a good character. The owner may also ask for copies of employment contracts to ensure the tenant is capable of paying the rent and bills for the term of the contract. While character references are often overlooked, proof of employment is often requested from potential long term rental tenants.

Repairs

All repairs to ensure the property is suitable for habitation are a necessary requirement of the owner. Any damages caused by the tenant during their rental of the property are the responsibility of the tenant who is required to notify to the owner. The only time when the tenant is permitted to carry out any repairs on the property is when they have prior consent from the owner, when the repairs a minor or when they are urgent. If the tenant is required to pay for urgent repairs to the property, the payment must be refunded by the owner.

Subletting the Property

Subletting is only permissible with consent from the owner of the property. Any rental income obtained by subletting must be lower than the monthly amount stated in the original rental agreement contract.

Selling the Property

If the owner of the property decides to place the property for sale during the course of a rental contract, the tenants of the property have the first refusal option for purchasing. If the tenant refuses the option to purchase the property, they still maintain the rights to their current rental contract. The contract cannot be terminated until its original expiry term, meaning that although the owner of the property may change, the tenant maintains their original rights to reside. In the event of the death of a tenant, the tenancy can be substituted for an immediate family member until the termination of the contract.

Rescinding  Rental Contracts

In the event of the property not being maintained to a habitable standard or if the landlord causes disturbances, the tenant may cancel the contract. The owner can cancel the contract in the event of non payment of rent, the deposit is not paid, when deliberate damage is caused to the property by the tenants, if repairs carried out without the landlord’s consent, or if the tenants are a serious nuisance to neighbors. In this case, the landlord is required to obtain a court order through a lawyer to have the tenants evicted. As evictions can be time consuming in Spain, carrying out correct vetting through references and guarantees prior to singing contracts is an important step.

General Considerations

Most rental contracts will be made in the real estate agents office, where they will follow a basic template that can be negotiated to ensure that the tenant and owner come to full agree over the details it contains. The contract may be accompanied by an inventory of items belonging to the property and will need to be checked by the tenant and either the owner or the real estate agent to ensure the items are all correctly mentioned on the inventory prior to being signed.

When renting a property through a real estate agent, the company will act as an intermediary between the owner and tenant. Any issues relating to the rental contracts during the course of the tenancy should be bought to attention at the earliest moment. Calmly discussing any issues that have emerged will assist in a fast resolution and in maintaining a good ambiance between the tenant, owner and representing agent.

About the Author

Property Investing Overseas provides unbiased information on portfolios and international markets within the global real estate sector, ensuring clients receive full knowledge prior to entering any property investment purchase. Visit our partner site at Property Letting Overseas.

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