It is natural for people who own an investment property to want to rent it out, as the income derived can help to pay off the mortgage, add to your monthly income or provide a nest egg for the future. Too often, though, proud homeowners keen to earn some extra revenue enter the process in a somewhat amateurish way, hoping the relationship with their tenant will always be one of mutual respect and benefit.
As with any business transaction – and make no mistake, this is a business transaction – things can go wrong. Most typically, errant tenants might damage the property or stop paying rent on time or at all. In such a case it is good to keep communication flowing and be flexible if people are temporarily experiencing problems, but in all situations there comes a time when homeowners have to cut their losses and evict the tenant.
A change in the law
Until now this has been a rather slow and involved process, but the Law on Measures to Streamline Procedures, Law 37/2011 for short, allows for the process to be greatly simplified and sped up. Passed recently by the Spanish government, the new law is part of a streamlining of legal procedures by the Ministry of Justice, and is aimed at encouraging property owners to rent out their properties.
Non-payment of rent, and the lengthy process involved in evicting tenants guilty of this, has been a major problem for people letting their properties, so it is hoped that by simplifying the eviction process and effectively providing better guarantees for homeowners, more resident and non-resident homeowners will be tempted to become landlords.
The main improvement provided by the new law is that it allows for the judicial process of eviction to be greatly sped up. This is achieved by eliminating unnecessary procedures, thereby reducing the response times of the courts and enabling greater agility in the implementation of court orders. Once a complaint for non-payment has been filed with the court by a landlord it starts a process that gives the tenant ten days to pay the outstanding sum or present an appeal to the claim. If the latter fails to do this, the court will immediately set a date for eviction, doing so within 2 weeks that until recently took up to 6 months.
The new legislation has resulted in 3 basic improvements to the current system. Firstly, the time period required before an eviction application can be filed has been reduced from 2 months to four weeks from the moment at which the landlord demands the payment of arrears. Secondly, the eviction order itself can be performed rapidly, as a court sentence is now sufficient for the eviction notice to be carried out on the day noted in the sentence. The third advantage is that the entire process can now be undertaken verbally, without the need for complicated documentation. Theoretically, this will allow for the passing of a court sentence in as little as 5 days.
The new law also means that, under certain circumstances, the landlord will no longer be bound to a minimum contract period of five years. The instances in which he or she can end the contract now includes cases in which the property is required for personal use, or needed for parents, children or a spouse.
However, such contractual limitations must be included in the rental contract, and if the tenant finds that the property has not, in fact, been used for the purpose claimed in the termination of the agreement, the landlord will be compelled to return him or her the use of the property. Additionally, the landlord will be obliged to give financial compensation to cover the costs of finding alternative accommodation. Any conditions should therefore be clearly stated in the rental contract in order to facilitate swift action in the case of non-fulfilment by either party.
Thanks to Raquel Perez from Perez Legal Group for taking the time to explain these recent changes to us.