Buying a Property in Spain with a Sitting Tenant

Buying property in spain sitting tenant

Firstly it is necessary to consult a lawyer who can review the lease and determine the exact situation and the legal options available. In Spain the legislation that regulates leases is the Law of Urban Leasing: Ley 29/1994 – Ley de Arrendamientos Urbanos (LAU).

This law establishes that the duration of a lease shall be that period which the two parties to the lease have freely agreed, renewable annually for a minimum of up to three years. To this rule there are two exceptions:

  • Where the tenant decides not to renew the lease, with an obligation to inform the landlord of an intention to quit the lease with at least the minimum notice period of 30 days before the end of the contact term or one of the renewal periods. If the tenant wishes to terminate the lease earlier, this needs to be carried-out in compliance with the terms of the lease for such contingencies, with the possibility that the landlord may be entitled to compensation for lost rental payments under the lease.
  • The second exception arises where, at the end of the first year of the lease, the landlord expresses the need to obtain vacant possession of the property in order that they themselves, their children or spouse can live there. In this case, a notice period of two months is required.

Where the landlord wishes to sell a property that is rented out, in the first place it is necessary to inform the buyer of the fact that the property is subject to a lease. If the buyer wishes to proceed, notwithstanding the fact that the property is rented to a tenant, the conveyance of the property may proceed as it would otherwise. In this case the buyer assumes the role of landlord previously held by the seller (this change is required to be communicated to the tenant) and therefore find themselves in the same legal position with regard to the tenant as the previous landlord.

If the buyer does not wish to buy the property because it is subject to a lease, should it be the case that only a short period of time remains before the lease can be legally terminated, it may be convenient to wait and notify the tenant that you do not wish to renew the lease. If this is not the case, then the only remaining option would be to negotiate with the tenant, given that they are entitled by law to reside in the property for the lease period, renewable up to three years.

A different situation entirely arises where the tenant fails to pay the rent or defaults on other obligations established in the lease, whereby the landlord must initiate eviction proceedings with an additional claim for outstanding rent.

It is important to bear in mind that the tenant, once informed of the intention of the landlord to sell the property, has a right of first refusal to acquire the property on the same terms as offered, though this right may be expressly waived by the tenant if the terms of the lease so include it.

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