The latest COVID-19 measures were published on Wednesday in a large, complex and somewhat disorganized legislation package. The objective is to protect the families, entrepreneurs, consumers and other vulnerable actors in the society, as well as to keep alive the economic activity that is still there hanging on by a thread.
Here are the TOP 3 measures regarding the rental agreements: forced extensions, prohibition of eviction and deferring or financing the rental payments.
Rental payments can be deferred, financed or even condoned under certain circumstances
The measures are meant to protect the tenants who have suffered from consequences of the virus and are therefore in a vulnerable situation. The balance between the interests of the tenants and the landlords is difficult to find, since 85% of the landlords are private individuals, and the rental income can be essential for them.
Therefore the Government decided to create two different scenarios:
1) When the landlord is a company, public institution or owns more than 10 properties:
- The tenant and the landlord can freely agree on if and how the rents will be paid for.
- If there is no agreement, the landlord must choose between these two options:
– Reduce the rent by 50% for a maximum of 4 months
– Postpone the payments of the rents for maximum of 4 months, to be paid back over the next 3 years
2) When the landlord is none of the above:
- The tenant can request that the landlord forgives the rents partly or totally; or allows postponing the payments.
- If there is no agreement between the tenant and the landlord, AND the tenant is in a vulnerable position due to COVID-19, he or she may have access to financing from the Government. The maximum financing the tenant can have is worth 6 months of rent, and it has to be paid back in maximum 6 years, extendable by 4 more years under certain circumstances.
The expiring rental agreements can be extended by maximum of 6 months if the tenant so requests
If the long-term rental agreement of your primary home expires between April 1st, 2020 and the date of two months after state of alarm will end, you as a tenant can request a maximum of 6 months extension to your rental agreement. The landlord cannot refuse the extension, nor update the terms against your interests.
The eviction processes are suspended for the next 6 months
If the tenants can proof that they are in a vulnerable position due to COVID-19, they cannot be evicted even in case of not paying the rent. If also the landlord claims to be in a vulnerable position due to COVID-19, the situation is assessed in each case separately to find a reasonable solution.
A word of warning
A word of warning for those tenants who think of taking advantage of the situation without being in a vulnerable situation due to COVID-19: The law provides measures and sanctions applicable to those who act fraudulently. These policies are particularly harsh, in order to avoid the non-application of good faith in the situation of social alarm in which we find ourselves. Every single personal situation has to be perfectly identified and justified to have the right to apply some of these exceptional measures.
In for a penny, in for a pound, this current situation is neither pleasant nor desirable for anyone, but rather disastrous and disruptive of the routine of many households in Spain. This will be the time to find middle ways, common ground and fair solutions that do not leave any of the parties involved with the sole total responsibility for the effects of Covid-19.
Can we help?
When in doubt, please do not hesitate to address your questions to professionals of AvaLaw. We are prepared and resourceful in how to negotiate and find those middle ways for your side so that we all are in a reasonable position to start recovering when the Covid-19 passes. Eventually, it will.