On June 4th, 2013, the Spanish Authorities adopted a recasting on the Urban Tenancy Act (Ley de Arrenamientos Urbanos 29/1994). The new regulation recasting was published in the Spanish Official Bulletin on June 5th, and it is in force since the day after.

Main changes are summarized hereinbelow.

Duration of the contract: The contracting parties are free to agree the duration of the contract. However, pursuant the former regulation, if the contract duration was less than five years, the lease was automatically carried over for successive annual terms until the expiration of a five year period. The new regulation changes this term from five to three years. In any case the tenant is entitled to put an end to the contract before the three-year-period by giving notice of his intention with at least thirty days prior to the termination of the contract or the termination of any of the renewals thereof.

This three-year compulsory lease carry over shall not be valid if the landlord, after the first year of leasing, informs to the tenant that he needs to recover the dwelling for his personal residence or his relatives’. The former regulation obliged to state expressly in the contract such provision.

Extension: Once the established duration of the contract, and at least a three-year period, has been completed, if none of the parties serves notice of his will to terminate the contract thirty days before the conclusion date, then, the contract shall be renewed for one more year. The former regulation stated a maximum extension period of three years.

Discontinuing: Tenant has the right to discontinue the agreement, once a minimum period of six months has been completed, giving notice of his intention at least thirty days in advance.

Registration in the Land Registry: If contracts are not registered the Land Registry they will not have effect before third parties which may have registered their rights in the Land Registry.

Sale of the property: In the event that a third party purchases a leased property being unaware about such lease condition, then, this party shall just be obliged to comply with the lease agreement if this has been registered in the Land Registry. If the contract has not been registered, the purchaser could apply for the termination of the contract. In such case, tenant shall be entitled to stay in the dwelling three more months paying the rent to the new landlord and to ask the vendor for damages.

Rental fee: Parties can agree that rental fee could be replaced during a certain period for the commitment by the tenant to make improvement works on the dwelling. In this event, tenant will not be able to ask for compensation for the improvements at the end of the contract. If tenant does not fulfil his commitment, landlord could ask for the termination of the contract.