Antonio Flores’ Blog

A couple of weeks ago, I received a telephone enquiry relating to an imminent bank repossession where the soon-to-be ex property owner, seemingly knowing the ins and outs of rental law, requested a quote to draw up a rental agreement. Out of curiosity I asked him if he was going to submit it to the Courts to stop the eviction, and unsurprisingly, he confirmed my question.

His plan was pretty simple: he as the landlord would sign a backdated tenancy agreement with a friend, for a smallish rent (around €200, inclusive of utilities!), with a view to not be considered an “unlawful occupant” and therefore, avoid eviction on grounds that Spanish laws do actually dispense protection to tenants.

What this enquirer forgot is that common sense applies in Spain too and therefore, in the absence of proof of a history of payments to him by his friend, the Courts would deem the contract bogus and deny its existence and therefore, validity. Moreover, I had to quickly advise him that in fact, the Spanish Criminal Code in its article 257 states that “any person who in detriment of his creditors, carries out any act of valuable disposition or creates obligations that delay, hinder or impede the efficacy of an embargo, executive procedure or reposession, whether judicial, extrajudicial or administrative, initiated or of foreseable initiation, will serve a prison term of between 1 and 4 years.

The Courts uphold the principle of common sense when judging the validity of rental agreements submitted by tenants; let us have a quick look at these 2 examples:

Appeal Court in Toledo: in this case, the rental agreement was deemed a simulation and thus did not express the true intent between the parties because, according to the presiding Judges, it was signed between brothers, the monthly rental was €400 on a 2,000 m2 warehouse, there was no visible activity in it (a big lock on the door is mentioned on a photographic report) and there were only private receipts to prove the rental payments. An accumulation of evidence that, in the eyes of the Court, was consistent with that of a simulated contract and thus, the repossessing bank was granted possession.

Appeal Court in Madrid: Judges in the capital city found the rental contract to be fully valid, as there is a presumption of validity of juridical contracts that needs to be destroyed by the bank, and this has not been achieved as the latter entity since only invoked that the contracts were subsequent to the mortgage loan. And the Spanish Supreme Court is clear on this point: “…not even a bank foreclosure extinguishes tenancy agreements agreed to after signing the mortgage loan, if there is no sufficient proof that there was collusion or fraud.”

Antonio Flores Litigation, Mortgages, Property Eviction Spanish Property, eviction tenants foreclosure, foreclosure in spain, litigation rental contracts, Spanish banks, spanish rental contract

Property renting can become a source of conflict between renter and landlord when either party has limited understanding of the law. As we don’t expect everyone to read the Property Rent Act here are a few things both landlords and tenants should know:

• A contract under 12 months is not necessarily of short term duration. Under Spanish law rental contract terms (for accommodation purposes) are to be freely agreed between the parties but if the tenant can prove that this property has become his habitual home (not a too difficult task) he will be entitled to extend the term up to 5 years.
• In the event of non-payment, it is illegal to attempt to kick the tenant out, change the locks, willingly interrupt utility supplies, send thugs, a night-time guitarist or any other person who with the use of unethical threat, coercion, intimidation or even harm attempts to evict the tenant. Whether we like it or not, only a judge can decide on an eviction.
• It is illegal to deduct anything from the monthly rent. Anything means costs incurred in by the tenant in repair works or self-assessed compensation packages for electricity cut offs, noisy neighbours, incorrect information supplied by the landlord or agent when renting etc. Any such claim has to be claimed directly from the landlord initially and further via the Courts, if not in agreement.

Haphazard screening and tenant selection too often results in problems (i.e. a tenant who pays the rent late or not at all, trashes your place or lets undesirable friends move in). It is advisable to check credit history, references and background prior to letting a property out.

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Antonio Flores Property insurance rental spain, rental contract spain, spanish rental contract, spanish rental law