Author: Sandra López Letón

Source: El País

More salt in the wound for rental housing in Spain. The market is so unsettled that in recent months an illegal practice has emerged that severely harms tenants but can also cause serious problems for landlords who unjustifiably abuse this method. It is the trick of false necessity.

More and more property owners are looking for ways to reclaim their homes before the rental contract ends. There is only one legal way to do this: by claiming the need to reclaim their property, whether for personal use or for a first-degree relative (such as a child or parent) or for a spouse in cases of a final judgment of separation, divorce, or annulment. “We receive multiple calls from landlords interested in this way of reclaiming leased homes before their term ends,” says José Ramón Zurdo, general director of the Leasing Negotiating Agency. He adds, “In the current climate of rising interest rates and inflation, there are genuine needs.” The legal advisory office of the Madrid Association of Real Estate Companies (Amadei) also reports more inquiries from real estate agencies about the cause of necessity, says Jesús Manuel Martínez, lawyer and executive secretary-general.

So far, nothing is illegal. Article 9 of the Urban Leases Act (LAU) provides for this possibility, provided the landlord has valid reasons and can demonstrate the urgency of evicting the tenant. It could be due to a job transfer, separation or divorce, a child, or health issues (the doctor might recommend the beach house…).

The problem is that the need of some landlords is false. It’s just an excuse to terminate the lease early. It’s impossible to know exactly how many cases are fabricated, but Zurdo estimates that up to half of the cases currently are fraudulent. “Obviously, there are many cases of fraud,” confirms Tito Petrizzo, lawyer and founder of the website Models and Contracts.

The hidden objective of these landlords is usually to reclaim the properties to sell them, but they also do so to make a new rental contract with increased rents to adjust to inflation — rent updates are currently capped at 2% — or even to change tenants because the current ones are late in payments or problematic. Another important issue is the government’s approval of an extraordinary six-month contract extension, which is in effect until June 30, 2023. “Many landlords, unable to reclaim their properties in the expected time, resort to these kinds of mechanisms,” says Zurdo. The Madrid Association of Real Estate Companies receives inquiries from agencies about the possibility of selling a rented apartment and then having the buyer claim necessity to occupy the property. “The state of necessity must be with the landlord, not someone who has subrogated into the contract because the one who buys a home to live in can buy a free home and not force the breaking of a rental contract,” explains Martínez.

To reclaim the apartment alleging necessity, whether real or simulated, a crucial requirement must be met. The rental contract must include a clause clearly stating the possibility of needing the property before five years have elapsed. In agreements signed from March 2019 onward (and also those from January 1995 to June 2013), this right can only be exercised if the clause exists. “In new contracts, it is already included by default to avoid losing the possibility,” notes Miguel Gastalver Trujillo, a Real Estate Law specialist. In contrast, in documents executed between June 2013 and March 2019, it is not essential for the clause to be present.

The landlord must wait until the contract enters the mandatory extension phase to claim the cause of necessity. It is important to know that it can only be exercised after the first year of renting, not before, and it is only valid for natural persons, not legal entities. “The owner must communicate their intention in writing to the tenant at least two months before they intend to occupy the property,” says Fátima Galisteo, head of Galisteo Abogados. It is very important to clearly indicate who the person in need is (the owner, their child, parent, or spouse due to separation or divorce).

Move within three months

But this is not enough, and here is where problems can arise for landlords who cheat because they must prove the need with objective and properly justified reasons. Additionally, the LAU requires that the landlord or their relatives establish permanent residence in the recovered house. They must occupy the property within three months, and if they do not move within that period, the tenant can resort to the courts to demonstrate that their rights have been violated. Sometimes, even if the owner has no particular interest in occupying the rented property, “they make the effort to move there for a year to eliminate the risk of tenant claims,” says Gastalver.

Judges often distinguish in their rulings between the landlord’s need and convenience or comfort. If the tenant wins in court, they have two options. They can demand to be rehoused in the property with a new five-year lease under the same conditions as the original and be compensated for moving expenses. Or they can “be compensated with an amount that depends on the period of forced extension they were deprived of due to the landlord’s fraud. For contracts signed today, one month of rent for each year left to reach five years of contract validity,” explains Gastalver. This lawyer confirms that many clients come to his office to explore whether the cause of necessity could be used to terminate a contract, but he always warns them that if the reason is not real, they risk the tenant detecting it.

The problem is that 70% of tenants leave the apartment without embarking on a lengthy and costly legal process. “Usually, they don’t bother checking if the owner occupies the property. They have enough trouble finding a new place and, once found, they relax,” comments Jesús Manuel Martínez (Amadei). Those who fight encounter a problem: “Being able to prove the falsehood or fraud. Ads for sale or rental that landlords themselves post after falsely evicting the tenant are useful for this,” says Petrizzo. This lawyer frequently deals with “cases of tenants who are forced to leave due to necessity when, in reality, the landlord seeks to raise prices or sell the property.” In case of suspicion, he recommends that the tenant send a letter to the landlord expressing their desire to continue in the property.