It is certain that you have sometimes wondered how a rental contract is made; if you continue reading you will know all about the essential points. 

A written contract should always be made when renting a property to protect the rights of both parties, which would be subject to the general regime established for the security of  rentals.  By this contract , the owner transfers the use of a property to the tenant in exchange for a fixed rent agreed between the parties. 

The contract should reflect in writing all agreements between the parties, as well as alternative dispute resolution systems: negotiation, conciliation, mediation and arbitration, failing that, by the provisions of title III of the urban leasing law and, supplementary, by the provisions of the Civil Code.

THINGS TO TAKE INTO ACCOUNT.

When a private owner rents a property for housing use, he is obliged to declare the income on his income tax return  for the following year. It is declared in the section Real estate capital returns.

The owner must declare the difference obtained (Net Income) between the income and the expenses he has Expenses could be: IBI, repairs, loan interest, etc.

When a company rents a property for housing use they must declare the income of this rental in their Corporation tax or in whichever system corresponds.  

The person who rents a property for housing use, in principle, does not have any obligation, but can deduct the annual amount of the rent for the habitual residence in the income tax return  (the percentage depends on the tax base) and any renovations  made by him ( which have been agreed with the owner).

The contract is the reference. 

In the event of any dispute, the signed contract acts as the main reference. The purpose of the contract is to constitute an obligitary  bond derived from the free will of the parties and, in fact, it is said that the contract is the  source of obligations, because what is agreed between the parties by means of a contract obliges them to comply exactly as if it were the Law.

The clauses

The clauses of the rental agreement can never be contrary  to the provisions of the Urban Leasing Law (LAU 24/94 of November 24), with the modifications established in Law 4/2013, of June 4, on measures of flexibility and promotion of the housing rental market, and additionally, civil code regulations. In lease contracts it is common to modify some sections to adjust it to the specific wishes of landlord or tenant.  what the landlord or tenant wants. There are a series of clauses considered null by the courts that are repeated quite frequently. one of them is to establish the power of access of the landlord to the house to check the status. Said clause is contrary to the inviolability of the domicile established in Article 18.2 of the Spanish Constitution. Therefore, if the tenant refuses to give access to the landlord, he can not go to the Courts to demand his right, since the tenant's domicile will enjoy special protection.

Rental contract model.

The standard lease contract model can be purchased in tobacconists. It is a stamped paper form that contains the basic data of a lease, but not the particular clauses that the parties want to agree on in each specific case

This form has the advantage that, with its purchase, the Transfer Tax and Stamp Duty is settled. If the contract is made by the owner, the payment of this tax must be made by means of the 600 model within 30 business days after the signing of the lease contract and for the entire duration of the contract (and not every year). It would only be paid each year if it is extended from year to year. For example, if the monthly payment is between € 480 and € 960, the payment is € 3.37, but this amount may depend on each autonomous community.

HOW TO MAKE A RENTAL AGREEMENT.

It is important to write correctly a lease with all the clauses necessary for both parties, landlord and tenant, to qualify for all their guarantees. By putting  these clauses in writing we help prevent problems in the event of any unforeseen event.

As in any contract, it will be necessary to clearly state the identity of the contracting parties and the date and place where the contract is signed.

Describe what is being rented.

Likewise, the contract will describe the property with all the physical data, regarding the street, number and situation inside the building; In addition to all the advantages or options it may have: garage, storage room, use of common areas, etc.

It must be noted that the house is in good condition, and there is  a photographic inventory made and/or an inventory in writing so that is is possible to compare the condition of the house at the time of the rental beginning and at the time of the lease terminating.

Duration

With regard to the duration of the contract, it is established that the tenant may withdraw from the lease agreement, once at least six months have elapsed, provided that the landlord is informed at least thirty days in advance. The parties may agree in the contract that, in the case of withdrawal, the tenant must compensate the landlord with an amount equivalent to one month's rent in force for each year of the contract remaining to be fulfilled. The periods of time less than a full year will allow one to calculate proportionally the compensation.

Deposit and additional guarantees.

You should also write details of the deposit and the conditions for it to be returned to the tenant at the end of the contract. The deposit is a deposit for the landlord. It constitutes an amount of money that the tenant gives to the landlord as a sign of compliance with all the clauses until the end of the contract.

There are other guarantees that the owner can ask the tenant.  For instance  a bank guarantee. The bank delivers a document with the amount requested by the landlord so that in case the tenant leaves the property prematurely, the bank will deliver the sum of money. Obviously, it will then require the customer to pay the corresponding amount.

Rent.

The tenant will pay the landlord the amount that is set as rent. They are free to agree on the index by which they will review the rental price, specifying if it is per month, per year or another term. Experts confirm that the IPC continues to be the main reference for reviewing rents.

One of the new introductions made during  the last reform of the LAU, is the regulation in its article 17.5 of the substitution of the payment of the rent price for the realization of works of reform or rehabilitation of the house. In this sense, it is important to be clear about the circumstances that must be included in the corresponding lease agreement.

Delays in payments

Should the tenant be late in making the rental payment this is a serious breach of the rental contract as he is not complying with the obligations of the contract it can give just cause for resolution of the contract.

Rental use.

A dwelling lease is considered to be a lease on a habitable building whose primary purpose is to satisfy the permanent need for housing of the tenant. When this fact is not given, that is to say, that it is not destined for  habitual residence, it will be reason for resolution.

The Urban Leasing Law says that the leased house can only be sublet partially and with prior written consent of the lessor. That is to say, if we do not want our tenant to sub-let our house, we must record it in writing

Costs

As a general rule, the IBI, the community of neighbours, costs for rubbish disposal, the insurance of the house and maintenance costs   (the boiler, for example) are the responsibility of the landlord. While the tenant must pay everything that can be measured with by usage ; like water, light, gas, telephone, etc.

In practice, the payment of the different consumptions will be subject to prior agreement between the landlord and the tenant.

In terms of housing conservation, the landlord must carry out, without increasing the rent, all the repairs necessary to maintain it in good habitable condition

The small repairs for ordinary wear and tear during the normal use of the property are the responsibility of the tenant. 

Inscription in the Property Register

Leases on real estate are registered in the property registry. The main advantage is the possibility of quickly resolving the contract by resorting to the notarial or judicial requirement in case of non-payment.

How to finalize the contract

Termination agreement

The answer to the question of how a rental contract is made is that it is equally important to clarify how it will end as how it will begin.   

When the end of the rental agreement is reached, it is important to sign an agreement between the tenant and the owner stating the termination of the  said contract. Not only is it important to stipulate  the end of the rent, but also to ensure compliance with the obligations that remain pending at the end of the contract, for example to establish a termination agreement with deposit not being returned until all invoices have been received

Departure of the tenant. 

In the contract, the compensation to be paid in case of the tenant's departure must also be established: in that case, compensation will have to be paid with the amount fixed.

The lease also incorporates the possibility of requesting eviction if the lessee stops paying the rent, for example, from the 10th day of the month in which the tenant had committed the non-payment.

A late interest is also included for each day that passes since the end of the contract without the tenant having returned the home, equivalent to twice the daily rent.

What works can be done.

When necessary works are needed on the property which cannot reasonably be deferred until the conclusion of the lease ,the tenant will be obliged to agree to it, even if it is very annoying or during which it is deprived of part of the dwelling.

If the work lasts more than 20 days, the rent shall be reduced in proportion to the part of the house from which the tenant  is deprived.

The tenant can not make works that modify the configuration of the dwelling or of the accessories (furniture, storage rooms, parking spaces and other dependencies or spaces), without the written consent of the lessor.

Pets in the house

The law does not expressly mention the possibility of keeping pets, but allows both parties to agree on the subject.

It makes clear that housing leases will be governed by the pacts, clauses and conditions determined by the will of the parties.

For practical purposes, this means that the landlord  has the power to prohibit pet ownership.

But it also means that, if there is no express mention in the contract of said veto, the tenant can keep pets on the property 

Inventory attached to the contract.

It is best to attach an inventory that stipulates all that the property contains This document is useful to contrast the state and use of the dwelling; at the beginning by the tenant, to check that everything works perfectly and at the end by the owner, to check that there is no deterioration or loss.

Should you have any questions about how to make a rental contract , do please contact us and we will be happy to help you.