- By Daniel SOT
How can a tenant legally withdraw or renounce their housing rental agreement
One of the most important principles in civil law is what is called the "Pacta sunt servanda", that is, that contracts are to be fulfilled and complied with. If this principle was rigorously applicable, if one of the parties agreed to pay rent for a certain period of time to the owner of a home, they should comply with it without the possibility of unilaterally "breaking" the contract.
However, in housing lease contracts this is not the case and the tenant has the possibility of being able to disassociate themselves from the rental through two mechanisms:
1.- One option is to terminate the contract as a result of a serious breach by the owner, which would empower the lessee to be able to terminate the contract. It would be, for example, in the cases in which the house does not meet the necessary habitability or health requirements that allow a tenant to reside in it and that it complies with the purpose of being their habitual residence.
2.- Another simpler option, withdrawing from the contract without giving any reason, although in this case the conditions that we will later expose must be met for it to legally correct.
In this post we focus on this second option, so to speak, the possibility that a tenant that wishes to terminate the contract without needing to allege any reason and we will develop when it is possible to claim the tenant a compensation and when it is not. We have to clarify that what it is going to be detailed below is only applicable in house rental agreements, but it is not in those in which the object that is being rented is a business local or a local of a different use of housing, because in these other scenarios, the response and legal solution would be different.
Is a tenant allowed to withdraw or renounce the lease?
The response to this question is affirmative. Taking into account the marked social element that this type of contract entails, since they fall on such an essential aspect for everyone: the housing, the Law has searched and encountered an equilibrium between the interests of the tenant and those of the owner, giving the option that the tenant can terminate the contract and leave the rented house before the term that was first established in the signed contract.
In this sense, the article 11 of the Ley de Arrendamientos Urbanos (Spanish Urban Rental Law), permits that the tenant can terminate the agreement in advance, without the necessity to invoke any cause.
It should be noted that this power to break or terminate the contract in advance is only held by the lessee. In other words, the landlord/owner cannot withdraw from the contract, and they could only terminate the contract if there has been a serious breach of the tenant's obligations, or they need the home to live in for themselves or for a descendant (provided there are a series of legal requirements to do so).
If the rental agreement says that it is not possible to withdraw from the contract or does not deal with this issue, can a tenant also dissociate themselves from the contract?
The answer continues to be yes. In other words, the judges would consider null and void any clause in the contract in which a tenant agrees not to be able to withdraw from the contract. Therefore, similar clauses will be null and void, as they are contrary to the law, such as “It is agreed a minimum and obligatory duration of one year, so if the tenant withdraws from the contract beforehand, he must pay all pending rents until the annuity is completed”.
The law, regarding this matter, is imperative and prevails over what the contract says (except if the contract clauses are favourable for the tenant, in which case what the contract indicates would be applicable), hence, even if the contract does not say anything about the tenant's possibility of desisting and breaking the contract in advance, the tenant may do so as long as they meet the requirements that we will indicate below.
In which section of the Urban Leasing Law does the possibility of early termination of the contract be included?
As we already mentioned, it is regulated in article 11 of the aforementioned Law, which establishes the following:
“The lessee may withdraw from the lease, once at least six months have elapsed, provided that he notifies the lessor at least thirty days in advance. The parties may agree in the contract that, in the event of withdrawal, the lessee must indemnify the lessor with an amount equivalent to one month's rent in force for each year of the contract that remains to be fulfilled. Time periods of less than a year will give rise to the proportional part of the compensation.” [literal translation from the Spanish reading]
What are the requirements for a tenant to an early termination of the agreement?
As the Law regulates, the requirements to desist from the contract are the following:
- At least six months must have elapsed since the contract was signed. That is, the tenant would not have the right to renounce the contract if, for example, only three months have elapsed. However, if, on the contrary, those first six months have already elapsed, you can renounce the contract at any time, even if the contract is already in a situation of extension, having elapsed the first five years of optional minimum duration for the tenant and mandatory for the owner.
- The tenant must give at least 30 days’ notice. Our recommendation is that if you are the tenant, said notification communicating the will to withdraw from the contract should be done through reliable means that proves the sending, receiving and content of the communication, such as a bureaufax (certificate letter). If you require this service, our office can prepare and send said communication. Notwithstanding the foregoing, keep in mind that this would not be an essential requirement for the validity of the withdrawal, since you could also withdraw even if you have not given 30 days’ notice, although the rent must be paid for the days remaining until it gets to the computation of the 30 days in which advance notice was not given, even if you no longer enjoy the housing.
Compensation in the event of withdrawing from the contract and maximum compensation claimable
In order for the owner/lessor to be able to claim compensation from the tenant for having decided to renounce or withdraw from the housing rental contract, it is essential that a clause stating that the owner has the right for a compensation equivalent to one month's rent in force for each year of the contract that remains to be fulfilled and that periods of time less than one year will give rise to the proportional part of the compensation.
If the contract that was signed does not establish any clause stating the right to demand compensation, the owner cannot claim any compensation from the tenant.
On the other hand, if the contract had stated a compensation greater than that monthly rent for each year of the contract that is pending of compliance (or proportional part in the case of periods of less than a year), the owner could not claim that addition compensation. He can only claim what has already been mentioned, a monthly rent payment for each year pending compliance.
For example, if a housing rental contract has been signed at a rate of €1,000 per month for one year on January 1st, and 30 days in advance, the landlord is informed that the tenant is going to leave the property on October 1st, the compensation for not fulfilling the remaining 3 months to complete that initially agreed year (the months of October, November and December) would be €250 (a quarter of the monthly payment, which would be the proportional part for the months not enjoyed).
Therefore, clauses similar to “A minimum duration of two years is agreed upon. If the tenant withdraws before that period, he must pay all the monthly payments that remain to be met until reaching those two years”. In this example, as we have indicated, if the tenant withdraws from the contract six months after signing the housing rental contract, they should only compensate the owner with the amount equivalent to one and a half months of rent, and not with 18 months of rent, which is what the literal wording says, since this clause would be considered void.
Do you want us to advise you in a housing rental withdrawal process or to intervene in the dialogue with the landlord or tenant? Do you want us to review your lease to verify if there is a compensation for withdrawal established and, if applicable, the amount required? Contact our lawyers by requesting an appointment at our offices, or if you prefer, use our videoconference service or legal consultations via email.
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Juan Manuel Ramos Quevedo
Enhorabuena por el artículo. Bien desarrollado y deja pocas o ninguna duda al respecto. Muchas gracias
Gracias por tus impresiones al respecto del artículo.