“COVID CLAUSE” WHEN RENTING PROPERTY IN SPAIN
Key points
Clause included in a lease agreement protecting tenants and landlords against second waves of infection and a further lockdowns.
Starting to be included in student residential lease agreements and commercial premises lease agreements.
The clause complies with residential lease agreements as long as it does not adversely affect the tenant.
September has normally been a month where many people start to lease a property either for commercial or for residential purposes. However, this September has been different since there is a “new normal”, which brings uncertainty and may determine future decisions. To avoid these uncertainties, some tenants are contractually preparing themselves against second waves of infections and a potential further lockdowns.
The so called “Covid clause” in lease agreements has been designed to find an agreed solution to these potential conflicts entailed by coronavirus restraints. Such clause provides a basic layer of protection for both parties who may otherwise be wary about entering into a lease agreement in the current scenario. Although these clauses tend to be quite widely drafted, an industry standard Covid clause will provide both: (i) price to be paid (discounts or price deferrals) in case a new lockdown is imposed and/or (ii) the fact that a party will not be in breach of certain obligations triggered by coronavirus restraints.
The correct use of this clause complies with the legal framework of lease agreements for commercial purposes (as per article 4 of the Spanish Urban Leases Act). In the case of residential lease agreements, the correct use of this clause also complies with the legal framework, taking into account that the clause will be valid as long as it does not breach the tenant’s minimum standards (as per articles 4 and 6 of the Spanish Urban Leases Act).
In light of the above, and taking into consideration how the coronavirus is evolving, we can expect Covid clauses in one form or another to be with us for some time to come.
For further information on property related matters do not hesitate to contact us by emailing info@carlanderlaw.com.
