Carlos Baos – Commercial premises rentals: Tenant’s Compensation and Legal Counsel

In prior articles, we have explored various crucial aspects of housing leases, including landlords’ rights to reclaim properties or the latest changes in the Property Law in Spain. This week, our focus shifts to business premises. We’ll explore the key distinctions from residential leases and explore the tenant’s compensation as outlined in the Urban Letting Law.

Non-Residential Leasing: Regulation and Key Differences

The distinctions among residential leases and commercial premises rentals are quite a few. Firstly, the security deposit. White residential rentals require a one-month bond, commercial leases demand two. Business rentals also offer more flexibility regarding subletting, as the landlord’s approval is not necessary. In addition, there is no specific minimum duration for commercial leases, unlike what happens with residential rentals.

Compensation for Tenants upon Contract Non-Renewal

One of the most substantial distinctions is the tenant’s compensation outlined in Article 34 of the Urban Letting Law. This compensation only applies when the contract ends due to the agreed-upon term’s expiration. And only if the tenant has not expressly waived it when signing the lease.

In order to request it, it will be mandatory to meet the following requirements. First, the tenant must have operated a commercial activity or business on the rented premises during the previous five years. Second, the tenant must have notified the landlord of their intention to continue the lease at a market rate at least four months before the lease’s end.

Tenant’s Compensation estimation.

Under article 34 of the Urban Letting Law, tenant’s compensation can be determined based on two circumstances:

• If the tenant relocates to a similar business within the same municipality, in the next six months after the contract ended, the compensation covers moving expenses and losses incurred due to a client base change.
• If the tenant does not initiate any commercial activities or starts another type of business within six months after the contract ends, and the landlord (or an unrelated party) starts a business with comparable characteristics in the same location, the compensation is equivalent to one month for each year of the contract, up to eighteen monthly payments.

Conclusion

At White-Baos Lawyers we are experts in the Urban Letting Law. If you have already entered into a commercial premises rental or you are considering doing so, feel free to contact us. We’re here to evaluate your situation and offer expert guidance on this matter.

You may be interested in the following services and articles:

Rent with option to buy in Spain. Legal advice. Concept. Taxation. Advantages. Etc.

Who should pay for repairs during a lease contract?.

The guarantors in the rental contracts. Eviction court cases against guarantors in Spain. How to get the money back..

Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

White & Baos 2023 – All Rights Reserved.