Regulatory specifics of rental housing transactions
Before signing a rental agreement in Spain, it’s important to carefully review all terms and conditions. Every clause can impact the rights and obligations of both parties. The Urban Lease Act (Ley de Arrendamientos Urbanos, LAU) sets out the main rules for such contracts. However, not all tenants are aware of the opportunities this law provides.
Tenant’s right of first refusal when the apartment is sold
One of the key, yet not always widely discussed, provisions of the LAU is the right of first refusal. According to Article 25 of the LAU, if the owner decides to sell a rented apartment, the tenant has priority to purchase it. This means that before making a deal with a third party, the owner must offer the property to the current tenant on the same terms.
The law provides for two mechanisms: the right of first refusal (tanteo) and the right of withdrawal (retracto). In the first case, the tenant can exercise this right within 30 calendar days after receiving notice of the intent to sell, including the price and terms. If the notice was not sent or lacks important details, the right of withdrawal applies. In this case, the tenant can purchase the property after the deal has already been made, matching the terms under which it was sold.
Restrictions and exceptions set by law
The notification period for exercising the right of first refusal is limited to 180 days from the date it is sent. The tenant’s priority is upheld over other applicants, except for co-owners or individuals whose rights were registered in the Land Registry before the lease agreement was signed.
If the owner is selling the entire building or all the apartments in it, the tenant cannot exercise their right over just one unit. In such cases, the right of first refusal may be granted to government authorities if they are interested in acquiring the whole property.
The tenant also cannot buy only the apartment if the lease includes additional spaces such as parking spots or storage rooms. In this scenario, the purchase must cover the entire complex as a whole.
To register the sale in the Land Registry, it is required to confirm that the tenant has been properly notified in accordance with legal requirements.
Option to waive the right of first refusal
The LAU allows tenants to waive their right of first refusal. Clause eight of Article 25 states that the parties may agree to this waiver. In that case, the owner is still obliged to notify the tenant of the intention to sell at least 30 days before the deal is finalized. Such a provision is common in contracts, especially in regions with a high turnover of tenants.
Lawyers recommend carefully reviewing the terms of the contract before signing. Waiving the right of first refusal may deprive the tenant of the opportunity to purchase the property on favorable terms.
