10 tips on leasing commercial property in Spain

Photo by Erik Mclean on Unsplash
Photo by Erik Mclean on Unsplash
28 September 2020, Larraín Nesbitt Abogados

1. Are you dealing with the owner or a legally empowered proxy?

Nothing worse than making a huge down payment upfront only to realise you have been duped out of your money leasing from someone who was not the owner. The first thing you should do is always verify you are dealing with someone who is legally empowered to let the premises (with a valid power of attorney).

2. Property size

Do not get short-changed on this, as leases are often calculated based on the property size and if the premise is considerably smaller you will get shafted overpaying.

3. Fibre optic cabling

Modern business is highly demanding on data input & transmission, requiring 24-7 high-speed connections to internet. Ensure your commercial lease already has fibre optic cabling pre-installed to save you weeks, if not months, waiting to have it installed. You really do not want to get stuck leasing office space that still uses a 48k dial-up modem, do you?

4. Company logo

Something like placing your company logo on the exterior is so basic that is often taken for granted and overlooked by many on searching for office space. Unless you plan to set up a dodgy boiler room, you really need your company logo on the exterior. Some communities of owners do not allow this, some business centres (centro de negocios) also disallow it. Needless to say, you really need one unless you are into shady practices. Don’t take it for granted and always ask.

5. The lease’s deposit (fianza legal)

By law, a tenant needs to pay a 2-month holding deposit on commercial leases. The security deposit ideally should be wired by the landlord into an official regional institution for its safekeeping as explained here. On top of this, it is usual to demand as well additional guarantees. On commercial lets, there is freedom to negotiate with a landlord how many month's deposit are required as additional guarantee. I stress there is leeway to negotiate, particularly on high-end commercial lets. For example, an outlet in a prime location in Madrid or a beachfront pad located in a posh place like Puerto Banus (Marbella) could easily set you back 12 months. Particularly if you are a non-resident tenant with no ties to Spain, landlords will ask for more cast-iron financial guarantees (to hedge themselves) as you may be perceived as a risky option. It is convenient this is cleared and negotiated by the parties from the outset as it is often a contentious point.

6. IBI tax and the Community of Owners quota

To avoid yourself nasty surprises, this will be one of the first points you ought to negotiate. As a general rule, landlords shore up both. However, in practice this may not be the case. So, make sure you ask first to be on the safe side, do not take it for granted.

7. Basura (refuse charge)

Basura (garbage collection tax) is a local rate that is normally borne by the landlord. Again, a question that is frequently overlooked by would-be-tenants. Make sure you know who’s paying for this to avoid nasty surprises with your town hall.

8. Who pays for utilities (water & electricity)? Are the utilities connected (up and running)?

Although the answer may seem blatant, that it is the tenant who pays for both, in practice you may be surprised to learn that it is in fact the landlord who pays for water in office lets. Electricity is paid for by the tenant. You should also inquire if the utilities are currently connected to the supply grid unless you fancy the exciting prospect of waiting for weeks on end (the infamous mañana, mañana one dreads to hear in Spain… shivers) for someone to actually turn up (unannounced) at the property and connect you. Clearly, a bullet to dodge.

9. Does it have a (modern) A/C?

There is no question Spain is a hot country all year round, particularly in the summertime. You really do not want to be stuck signing off a 12-month commercial lease only to find out your AC system is a vintage 1950s General Electric legionella-fest. This is one expense you should not be dragging your feet on and splash generously; bottom line, get yourself a good modern AC system.

10. And lastly…the Landlord

Success or business failure is often dictated by your rapport with a landlord. Try to always be on his good side as a dastardly one can easily make your life downright miserable. You should ask your agent on this. A high rotation of tenants is always a big no-no. This last point is unrelated to legal matters but in practice proves critical, so please heed my advice.

At LNA we can assist you buying, selling or renting out your property in Spain. We have 17 years’ experience in conveyance & tax. We are also specialized in Immigration & Residency permits.

Larraín Nesbitt Abogados, small on fees, big on service.

2020 © Raymundo Larraín Nesbitt. All Rights Reserved.

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