Renting: be wary of signing ‘reservation’ contracts

Raymundo Larraín Nesbitt, September, 21. 2020

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By Raymundo Larraín Nesbitt
Lawyer - Abogado
21st of September 2020

Spain is a very open country that accommodates people from all walks of life. The friendliness of Spanish people, coupled with its gorgeous weather and active nightlife, makes it a very attractive proposition to spend time living and enjoying life in a liberal society. Most people will dip their toes by renting out property before committing to buying, which is a very sensible thing to do and we strongly advise it in all our conveyance articles. You should always rent out first in the area you fancy living in to see how it works out for you.

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 tenants were 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 tenants 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 them 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 tenants 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 tenants 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 they had already signed a ‘pre-contract’ with the estate agency, and it specifically stated the reservation deposit was non-refundable; if they did not sign the lease, they 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.

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 them, we can glean a valuable lesson that is useful to legions of other would-be tenants, particularly in large cities such as Madrid and Barcelona. The lesson one takes from this is that you NEVER pay a penny unless you are first shown the wording of the final rental contract. 

"Every pound is a prisoner.” – Margaret Nesbitt

 

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Article originally published at IDEALISTA: Renting: be wary of signing ‘reservation’ contracts

Please note the information provided in this article is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

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