I. Introduction
In a recent judgment dated 26th September 2018, the Spanish Supreme Court has ruled on whether it should be understood that the tacit renewal of a lease contract occurs monthly or annually, depending on whether an annual or monthly rent has been established in the contract, with the consequences that this entails for the purposes of withdrawing from the new contract on the part of the lessee.
II. Case background and applicable regulations
The facts of the case concern a lease contract on business premises which terminated in 2009, in spite of which the lessee continued to occupy the premises pursuant to the tacit renewal of the contract, until they actually withdrew from the contract.
A joint reading of articles 1566 and 1581 of the Civil Code shows that, if upon the termination of the lease contract, the lessee remains in the leased property for fifteen days with the permission of the lessor, unless a requirement has preceded it is understood that tacit renewal has taken place, on an annual basis when an annual rent is stipulated, on a monthly basis when there is a monthly rent, or for days when there is a daily rent.
As indicated by the Spanish Supreme Court in the judgment in question, “the tacit renewal to which article 1566 of the Civil Code refers, actually gives rise to a new lease contract which is formalised through the tacit consent of the contracting parties; this is consent which is understood to have been caused by the lessee continuing to enjoy the rented property for the period of fifteen days once the temporary validity of the contract had finalised, with the permission of the lessor, who allows said term to pass from the moment of termination without requiring the lessee to proceed to return the possession of the property.”
Likewise, article 11 of the Urban Lease Act 29/1994, of 24th November, establishes that “the lessee may withdraw from the lease contract, once at least six months have elapsed, provided that the lessor is informed with a minimum prior notice of thirty days”.
In the case analysed, the lessor filed a claim against the lessee for the payment of rent corresponding to the period of six months advance notice which had not been observed.
The lessee filed opposition alleging that the contract was terminated in 2009 and that the tacit renewal occurred month by month, given that the rent, in spite of having been fixed annually, was paid on a monthly basis.
III. Decision
The Spanish Regional Courts have not coincided in their judgments regarding this issue: some take as a reference the term in which the rent is effectively paid, while others -coinciding with the interpretation accepted by the Spanish Supreme Court in its judgment- are inclined to establish the term of the new contract which arises by tacit renewal in accordance with the term for establishing the rent in general. Thus, as affirmed by the Spanish Supreme Court, “it is not logical to understand that a mere monthly fractioning of a rent set annually may determine that the duration of a contract is monthly, if this were the case, the determination of the rent for one year in the contract itself would be absolutely meaningless”.
IV. Practical conclusion
On balance, the judgment of reference should serve as a warning to lessees who continue to occupy the leased property following the termination of the lease contract -with the consent of the property-, given that, if the rent is fixed annually, they may not withdraw from the new contract until the first six months of each annual period of the contract have elapsed in which it is understood that the lease contract has been tacitly renewed, and the owner should be notified at least 30 days in advance.
From the point of view of the owners/lessors, the judgment of the Spanish Supreme Court entitles them to claim the payment of the rent from the lessees corresponding to the first six months of each annual period in which the lease contract is understood to have been tacitly renewed, provided that the rent was fixed on an annual basis in the initial contract.
Carla Villavicencio
Vilá Abogados
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19th October 2018
