Antonio Flores’ Blog

On the 12th of March 2020, hours before Spain’s socialist government politicians imposed a nationwide lockdown, their Andalusian counterparts passed an untimely regional Law Decree under the exuberant and encouraging name “Law Decree for the Improvement and Simplification of Laws for the Promotion of Productive Activity in Andalusia”. 

The law contains an undisguised declaration of war on red tape, specifically on certain aspects of the planning laws governing the grant of “build licenses” and more importantly, on the dreaded yet coveted LFOs-or License of First Occupancy or Occupation-, a piece of paper without which you cannot, in theory, turn your property into an Airbnb money-making asset via applying for a “Holiday Rental” registration. 

The revolutionary norm now allows architects to substitute Town Halls in the monopoly of grant of LFOs and gives them powers to sign off properties that, in accordance with applicable laws and regulations, would be entitled to get one (because they are law compliant or where not, because enforcement action is barred due to passing of time); and this is no small feat because, all over Andalusia, many properties would just simply never get an LFO no matter how hard you tried and how long you waited.

Qualified architects will now be able grant LFOs by means of a “responsible declaration”, an equivalent to a sworn oath or affidavit where an architect, subject to certain verifications, will issue a fully valid LFO. 

This is very significant in municipalities that have endemic license processing issues or are short of staff to process LFO applications rapidly. But also, those properties that having been built legally no longer are, due to planning permissions being removed or declared illegal, most notably in Marbella (circa 30,000 units).

Do you want to rent -or sell- your property but you lack an LFO? Get in touch with me and I will sure help you.

admin Property, Uncategorized Licence of first occupation, spanish rentals

The COVID-19 or “Corona Virus” has brought about new situations of potential legal conflict that we could have not even imagined before. With shops closing temporarily, airlines and hotels coming to a complete standstill and the curfew affecting the mobility of people, the fulfilment of thousands of contracts is now in question by reasons well beyond the particular circumstances of the intervening parties.

So can the parties pull out, suspend, adapt or terminate contracts of continuous performance? Royal Decree 8/2020 of the 17^th of March 25 has not dealt with the consequences of the Corona outbreak, save for a moratorium on mortgage loans for those classed as vulnerable.

This said, let’s see what the various situations any renter or property owner can find themselves in.

Rental Agreements

The Government has not addressed these contracts (as of 25/3/2019) and therefore, principles of civil law must be applied. There are two:

• Fuerza Mayor or Force Majeure. It’s French for “superior force”. The long and short of it is that if some expected event of such caliber takes place that prevents the parties from performing an obligation, the performance of that obligation is excused.Articles 1105, 1182, 1184 and 1258 of the Spanish Civil Code state that “Acts of God and Force Majeure liberate debtors from fulfilling their obligations due to superior force”.

• Rebus sic stantibus et aliquid novo non emergentibus is the legal doctrine allowing for a contract or a treaty to become inapplicable because of a fundamental change of circumstances. This is similar to force majeure but touches on fairly distinct considerations:
  1. There is incident of such magnitude that alters the bases of the contract
  2. Such incident frustrates the “commercial sense” of the contract and
  3. Breaks the balance of a contract and produces damage to one party due to supervening circumstances that could have not been contemplated in the contract or are alien to normal contractual risk analysis.

The consequence of applying these principles would be that contract gets “frozen” in time, suspended of its effects for the parties.

The downside to any impending legal conflict is the time and expense of a Court procedure, unless parties to a contract can reach individual agreements in the wake of what is an unprecedented situation.

Mortgage Loans

The moratorium offered by the Government will only apply to borrowers that are deemed to be in a situation of vulnerability, and this will happen only if (all) of the following occur:

• The property must be the main dwelling.
• To be unemployed or if self-employed, to have lost at least 40% of the sales.
• The combined income of the family should not exceed €1,600 (3 times the IPREM).
• And only if the loan repayment is over 35% of the net income.

The documents and procedures the state will require are family book, tax certificate confirming the reduction of activity, property deeds and once this has been reviewed by the bank, it needs to go to be ratified before a Notary Public.

For mortgage loans not contemplated by the Royal Decree 8/2020 of the 17^th of March 25, the above noted civil law principles on rental contracts could be applied here too.

Are you in any of these situations? Contact us, we can help.

admin Uncategorized corona virus, coronavirus, Covid-19, Force Majeure, Fuerza Mayor, Mortgages, Rebus sic stantibus, spanish rentals

At last the Government has pre-approved a law proposal (PDF-Spanish) to encourage property owners to rent out their properties. Even though property sales have slowed down substantially, the property rental market is not increasing, and a staggering 2.8 million properties in Spain remain empty. 

The proposed changes will mainly target the excessive length of proceedings (which in some instances can take up to 12 months) to enforce an eviction process. Below is a summary of the main law changes to be approved in due course:

• Notice of payment prior to going to Court is reduced from 2 months to 1.
• The Court proceedings are now conducted via an equivalent to a small claims court procedure and are therefore a ruling can be reached in a couple of months (depending on the specific Court).
• The Court ruling will now be enough to evict a tenant and will be enforced within 30 days, without having to execute the ruling (whereas before the ruling was not automatically enforceable as the landlord had to instigate this action). If the tenant cannot be found the ruling will be notified in the notice board which each Court has and will proceed to send the bailiffs.
• Landlords will be able to demand return of the property if they need it not only for their own use but for that of parents and children. This clause will have to be inserted into the contract in order to be enforceable.

It will be interesting to see how these measures, in addition to others, bring dynamism to an otherwise stagnant market and, more importantly, if the court system will be able to cope with the expectations these changes will introduce.

Antonio Flores Uncategorized rental contracts in spain, rental spain, spanish rental contracts, spanish rentals, spanish tenancy agreement