At times, some people choose to live in a rented property without signing a formal contract. Although this is not common or advisable, the question arises: is it legal? What are the risks of this practice? Below, we will clear up all your doubts.
The Legality of Renting Without a Contract
While it is legal to rent a property with a verbal contract, according to the Urban Leases Act (LAU) and Article 1547 of the Civil Code, this situation implies a significant risk for the parties involved. In case of disputes, the facts are subject to each party’s version.
Rights of the Parties in a Rent Without a Contract
The LAU stipulates that, in the absence of a written contract, the lease will last one year. After this period, the tenant can request annual extensions up to a maximum of five years. Thus, the rights of each party are as follows:
Rights of the Tenant in a Rent Without Contract
- The landlord cannot increase the rent unless there is a receipt to justify it.
- The right to occupy and enjoy the property without being disturbed.
- The right to request necessary repairs for the use and enjoyment of the property.
- Preferential right to purchase the property if the landlord decides to sell it.
- The right to make adaptations to the property in case of disability of the tenant or his or her spouse.
- The right to a minimum rental duration and to extensions as established by the LAU.
Rights of the Landlord in a Rent Without Contract
- The right to collect the monthly rent agreed with the tenant.
- The right to recover the property at the end of the lease.
- The right to establish the rent and deposit of the rental.
- The right to evict the tenant in case of non-payment, annoying, unhealthy, dangerous or illegal activities, or the realization of works that alter the structure of the property without consent.
Consequences of a Rent Without Contract
Among the potential problems that can arise from living in a rented property without a contract are:
Difficulties to Recover the Property Without a written contract, the landlord can have difficulties recovering his property. For example, if the tenant does not respect previously agreed conditions, such as not having pets, there will not be a document to certify such an agreement.
Complicated Rent Update The absence of a written contract can make updating the rent difficult, as either party could assert that no update was agreed or that it should be carried out through the index that suits them best.
Inability to Determine the Beginning of the Rent The lack of a written contract can allow the tenant to manipulate times to their advantage, extending their stay and complicating the eviction process, if necessary.
Refund of the Deposit Without a contract, the return of the deposit can be complicated, as there will not be a start date for the rental.
Fines for Renting Without a Contract Renting without a contract is legal as long as the law is complied with: depositing the deposit in the corresponding entity and declaring the income obtained. Otherwise, sanctions of up to 150% of the undeclared amount could be imposed.
Difficulties to Obtain Benefits Without a contract that proves the rental condition, difficulties may arise when accessing existing benefits.
What Happens If You Don’t Have a Rental Contract? You can live in a rented property without a contract, but in case of conflicts, the situation can become confusing, as it will not be able to determine when the contract started and when it can be terminated without the right to compensation.
How to Prove a Rent Without a Contract? To minimize risks and protect yourself from possible problems, you can:
- Keep receipts and invoices of all payments made.
- Save all communications and messages with the other party.
- Try to formalize the situation by drawing up a rental contract.
However, the best option will always be to sign a rental contract. A clear and detailed document will provide you with security and prevent misunderstandings or problems in the future.
Article by Living Sitges Real Estate