Let's say you're looking to buy a property in Spain in order to rent it out. Or perhaps you want it as a holiday home, or even to move in yourself.
If the property you’ve bought already has a tenant living there, this could complicate matters. So what are the rules for the subrrogación de contrato de alquiler as it's called in Spanish? What does the law say about buying a property in Spain with a tenant living there?
What are your rights, and what are the tenant's rights?
What happens to the contract when the property changes hands?
In Spain, when property is sold and ownership changes hands, if there is a pre-existing rental contract in force, it must be respected. This is outlined in the Spanish Law on Urban Leases (LAU).
Generally speaking, with a sale of a house or flat with a tenant, the buyer must wait until the term of the contract expires before occupying the property themselves, except in certain circumstances. More on that below.
However, it is important to note that the rental contract must have been registered in the Spanish land registry, because if it wasn't and you wish to occupy the property yourself, then you can legally give the tenant three months to vacate the property.
READ ALSO: Property in Spain - how and when can you negotiate the price?
What about the deposit?
In Spain, landlords are (in theory) obliged to deposit their tenant’s security deposit in what the law calls a ‘competent body of the autonomous community’ - i.e. an official organisation in your region.
Whether all landlords do that is another story, but officially speaking, deposits should not be in the bank account of the previous landlord and there should be no need to transfer it between seller and buyer.
At the end of the contract, tenants should get their deposit back as long as there are no unpaid debts, outstanding rental payments or utilities bills, and there are no damages to the property.
What about the terms of the contract?
The new owner of a pre-rented property cannot change the conditions of the current contract. The clauses of the original contract signed by the tenant and the previous landlord must be respected until the contract ends on the date as outlined in the original contract.
What happens if the contract expires?
If the contract expires when the property changes ownership, what happenes next depends on what the new owner wants. If you prefer to renew the current contract, you can, if you prefer not renew it, you also can. You are also within your legal rights to sign new agreement with new conditions, including with a new rental price.
If the buyer prefers not to renew the contract, they must notify the tenant in advance, according to Article 10 of the Law on Urban Leases (LAU), LINK the landlord must give the tenant four months notice in this situation.
Are there any circumstances when the new landlord can terminate the contract?
Yes. According to article 9 of the LAU: : "Once the first year of the contract has elapsed and provided that the lessor is a physical person (as opposed to a company), the mandatory extension of the contract will not be applicable when, at the time of its conclusion, it has been expressly stated in the same, in an express manner, the need for the landlord to occupy the rented property before five years have elapsed in order to use it as a permanent dwelling for himself or for his immediate relatives or by adoption or for his spouse in the event of a final judgement of separation, divorce or marriage annulment.”
Therefore, legally speaking, if a new landlord can justify or demonstrate that he or she needs the property as their habitual residence, or for their immediate family members, they are within their rights to do so.
READ ALSO: Six key differences between buying a property in Spain and in the UK
Comments