Leasing contracts in Spain: expenses and fees
Expenses linked to leases
One of the main costs associated with housing are utility bills. According to Art. 9.1 e) of Law 49/1960, dated 21 July, of horizontal property, the property owner is obliged to contribute to the general expenses for the proper maintenance of the property, and must therefore pay the utility bills.
However, it is possible that through mutual agreement the tenant assume paying the utility bills under Art. 20.1 of the LAU. In this regard, the Judgement by the Provincial Court of La Rioja, dated 23 January, explains that the general costs referred to in Article 20 of Law 29/1994, dated 24 November, which permits an agreement on the costs borne by the lessee, are the costs for the proper maintenance of the property, its services, taxes, charges and responsibilities that are not susceptible of individualization and that correspond to the leased property or its accessories, and that the general expenses that this article refers to are known as community fees (…).
In order for the agreement to be valid, it must be in writing and must determine the annual amount of such expenses at the date of the contract. In these cases, within the first three years of the lease, the amount the tenant must pay can only be increased by agreement of the parties on an annual basis, and never in a percentage higher than twice the amount that the rent can be increased, as agreed to in the contract (Arts. 20.2 and 18.1 of the LAU).
On the other hand, are the costs related to the provision of electricity, water, gas, telephone and its variants. Since it is the tenant who, as a result of the lease and use of the property leased, enjoys these provisions, it is logical that they assume this payment.
In fact, under Art. 20.3 of the LAU, in circumstances where the property relies on individualized accounts, the tenant will be obliged to pay the expenses generated by such services unless otherwise agreed to. The decision on 30 April 2015 by the Provincial Court of La Coruna states that As agreed to in the contract, (lex contractus, Article 1091 of the Civil Code) the tenants shall bear the «costs for services individualized by meters (water, light, telephone, gas…. Another clause is not necessary because it is a legal obligation under Article 20.3 of the Law of Urban Rents. Consequently, if the supplier of electric power (in this case, Natural Gas, S.A) and water (Municipal Water Company of La Coruña, S.A.) issue invoices, whereby consumption is reflected in the meter reading, tenants are required to pay them. Similarly, the Provincial Court of Malaga on 23 October, 2015 stated that It is a general rule that the expenses for the exclusive consumption by the tenant must be paid by the tenant, because the consumption of the services or supplies consumed was only to the tenant’s benefit. Refusing to pay for the services consumed the tenant has enjoyed, and claiming that the landlord must pay, means that the tenant seeks to obtain an unjust enrichment at the expense of the landlord, who would not enjoy the right of the law.
Regarding the fees associated with housing, one must remember the Waste Collection Rate. It is a municipal tax that is a result of Art. 12.5 of Law 22/2011, dated 28 July, on waste management and contaminated land, the purpose of which is to tax the collection and disposal of garbage and other municipal waste.
The LGT or where appropriate, the relevant municipal ordinance, determines who is considered the taxpayer obliged to pay the fee. The issue has been discussed in practice, although in line with Arts. 2, 20, 35 and 36.2 of the LGT, it could be understood that, in principle, the lessee, by virtue of the use of the property generates the chargeable event and in turn benefits from the municipal benefit of the waste collection, so that it is consistent the lessor recuperate the payment fee from the lessee.
Despite the above, and in relation with this issue, the Madrid Provincial Court in its judgement on 12 March 2012 stated that the taxable event that is generated or may be generated by the municipal waste collection, which is usually related by definition to the use of the house, but it is not based on the proper use of any holder or owner thereof, is generalized to all properties, regardless of the occupier and the legal relationship or title on the deal; ultimately, the taxpayer is the holder or owner, not the effective user and may not coincide both qualities.
In short, this is a rate that, without prejudice to the view of the Tax Administration that the lessor is obligated to pay, it makes perfect sense to pass to the lessee by an express provision contained in the leasing contract.
In light of the above, the principle of the freedom to contract governs when concluding which taxes and other expenses related to the lease a lessee will be responsible for, without prejudice to the more or less logical justification that could support such a result and without prejudice that such an agreement may have to the obligations of the tax payer with regard to the Tax Administration, Residents Associations or supply companies. Therefore, as expressed in the beginning of this article, the lures hidden behind affordable rents, leads to the obligation or assumption of costs by the lessee that makes the offer unnatural for the tenant, so that the reading, comprehension and negotiation of the leasing contract is fundamental.
This article is not considered as legal advice