Renting: be wary of signing ‘reservation’ contracts

12 August 2020, Larraín Nesbitt Abogados

Last week I had to deal with a case in Barcelona that is a prime example of why you should be wary of signing reservation contracts on renting in Spain.

With the excuse the property was in a highly sought-after location, and someone else could snag it, the tenant was forced to pay a non-refundable deposit equivalent to one month’s rental to strike the property off the market for the next 30 days.

The problem was that the tenant had not seen the final contract itself, only this pre-contract reserving the property which was only a few paragraphs long and didn’t go into any details. Once signed, a few days later they emailed her a copy of the proposed rental contract, which I reviewed.

The second (and final) contract was a prime example of abusive clauses. Not only did the landlord force the tenant to pay for all the normal expenses (i.e. water, gas and electricity) but also for the community of owner’s fees, local taxes (even garbage collection), and also for the annual maintenance of the (worn out) heater! On top of this abuse, they also made the tenant responsible for any and all damages to water pipes, electrical grid, rooftop, drainage and gutters! This is a problem, because as the property was fairly old, it was highly likely there were hidden issues not apparent to the naked eye the tenant was unaware of.

Needless to say, the contract was a total rip off. The problem was that as she had already signed a ‘pre-contract’ with the estate agency, and it specifically stated the reservation deposit was non-refundable; if she did not sign the lease, she would forfeit a whole month’s deposit, which was a lot of money. Although a sizeable loss, it was always better than getting into a long-term contract (five years plus) with such abusive one-sided conditions that could prove most onerous on the long run.

The lesson one takes from this is that you NEVER pay a penny unless they first show you the wording of the final rental contract. On negotiating, you always have leverage until you part with your money. Don’t fall for the drivel of blindly signing pre-contracts, or reservation contracts, only because you are being railroaded into signing them. It’s just standard sales pitch, and it’s poppycock.

Although this proved to be an expensive experience for her, we can glean a lesson that is useful to legions of other would-be tenants, particularly in large cities such as Madrid and Barcelona.

At LNA we can represent you buying, selling or renting out your property in Spain. We have 17 years’ experience in conveyance & tax. Larraín Nesbitt Abogados, small on fees, big on service.

2020 © Raymundo Larraín Nesbitt. All Rights Reserved.

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