The law on rural leases explained

The Ley de Arrendamientos Rústicos has many particularities and differences with the Ley de Arrendamientos Urbanos. In fact, it is not a mere whim that the regulation it contains is divided into two different legal texts. Due to its special complexity, we would like to explain its fundamental aspects here.

What is meant by rustic lease?

To begin with, in this article we are going to try to explain what is explained in Law 49/2003, on Rural Leases, which was modified by Law 26/2005, of 30 November. This was done with the aim of adding certain points of interest which we will talk about later on. In its first article, it already defines exactly what a rustic lease is and how it differs from an urban lease.

Specifically, the law says that a rustic lease is a property or part of it that, by means of a temporary assignment contract, is rented by the owner to a subject for the purpose of exploiting it in terms of livestock, forestry or agriculture. This lease must always be in exchange for the payment of an agreed price or rent.

The duration of the rural lease contract

The duration of this type of contract has always been one of the most controversial points of this law. Specifically, at present, the specific regulation stipulates that the duration will be, in all cases, 5 years or more. In fact, any clause that foresees a shorter duration will be automatically null and void.

Rent from rural leases

The legislation is rather more flexible in this matter. In fact, it clearly specifies that it will be the lessor and the lessee, i.e. the owner and the person who wishes to rent the property, who will agree, by mutual agreement and in complete freedom, on the amount and form of payment of the rent. Furthermore, such payment must be compulsorily in cash. It is true that the door is left open to the opportunity to pay this remuneration in kind. However, it must be converted into money in order to be enforceable.

Obviously, the amount of rent to be paid by the tenant is not immovable. In fact, this aspect was represented in the Law on Rural Leases after its amendment in 2005.

Specifically, what was done was to add an additional article. It specifies that the two parties must establish the rent revision system they consider most convenient. In the event that this does not exist and is not reflected in the contract, the law sides with the tenant by stating that "the rent review will not be applied".

On the other hand, the lessor and the lessee have the option of using the legal index that they deem appropriate to carry out the rent review. The most common in this type of case is the Competitiveness Guarantee Index. In any case, the value will be updated with the expiry of each year of the contract, i.e. every 12 months after the contract is signed.

Is it possible to carry out works on a rented rural property?

This legal text also contemplates the possibility that the rented property may require works at a given moment. In fact, it requires that it is the owner who, throughout the duration of the contract, is responsible for carrying out such works, provided that they are essential for the exploitation and use of the property for the use agreed in the document signed by both parties. Obviously, this does not entitle him to increase the agreed rent in order to compensate for the additional expenditure.

However, there are not few cases in which the lessor refuses to carry out such works, delegates this responsibility to the lessee or simply tries to delay their execution as long as possible. In such cases, the tenant has the following legal rights:

• Terminate the contract of your own free will and without the need to compensate the landlord.
• Request that the amount of the rent be reduced by an amount proportional to the cost of the works.
• Demand, by judicial means, that the landlord carry out the relevant works.
• Assume the cost of the works and carry them out himself in order to, subsequently, request their reimbursement by means of compensation through the non-payment of the necessary amount of rent.

Exceptions foreseen in the Law on Urban Leases

As is usually the case in texts regulating leases in general, this law provides for a series of exceptions that are not obliged to comply with the above. Specifically, these are the following:

• Contracts covering exclusively a season lasting less than a full agricultural year.
• Rural land acquired on the basis of social interest or public utility.
• Lease of land that has already been tilled by the lessor with the aim of being planted or sown by the lessee within a specific period of time.
• Communal land or property belonging to neighbouring forests or local corporations. In these cases, it must be governed by their specific regulations.

Furthermore, the Ley de Arrendamientos Rústicas is also not applicable in the case of contracts for the rental of land which are concluded for the following purposes:

• To hunt animals.
• To make use of fallow land or seedbeds.
• To use secondary pastures, stubble fields, mountain pastures and ploughed meadows.
• To carry out livestock farming operations of an industrial nature.
• For the purpose of carrying out any activity that cannot be defined as livestock, agricultural or forestry.

On the other hand, the legislative modification carried out in 2005, to which we referred above, also includes a series of circumstances that entail the non-application of the Rural Leases Law. These were specified so that there would be no interference with the Law on Urban Leases currently in force.

In particular, the most important of these is their inability to act in the event that the lease has been concluded under the conditions provided for by the Ley de Arrendamientos Urbanos. This usually occurs in the case of farms with a dwelling that is rented solely and exclusively for the purpose of living there, but without exploiting the agricultural land.

Some conclusions on the Rural Leases Law

Undoubtedly, these are the most important details you should know about the Rural Leases Law currently in force in Spain and what mainly differentiates it from the Urban Leases Law. As you will have been able to see, the fundamental element lies in the fact that the rural properties to which it refers must be used for agricultural, livestock or forestry exploitation, i.e. not for residential purposes.

We hope we have been of help to you in understanding such complex legislation. Furthermore, we would like to recommend that, in case of any doubt or conflict, it is always best to contact a lawyer specialised in the matter. This is the only way to enjoy all possible legal guarantees.