To rent an apartment, they will ask you for a guarantee, deposit and insurance

The new housing law turned the real estate market upside down. Tenants and owners want to guarantee collection and a fair amount of rent. Mariluz Rodríguez, lawyer for Legálitas, answers the basic questions to consider.

1.- What is a deposit? This is the amount equivalent to one month’s rent, which the lessee, after signing the lease agreement, must deliver. Its purpose is to guarantee compliance with the obligations assumed by the lessee. For example, non-payment of a utility bill, even though it is not an amount that serves to offset the payment of that bill while the contract is in force.

2.- What is a deposit? It is an additional guarantee and a complement to the deposit that the landlord can request. Its amount will be higher than two months’ rent (in contracts not longer than five years, or seven in the case of a legal entity landlord). The purpose of the deposit is the same as that of the deposit, to guarantee the fulfillment of the lessee’s obligations.

3.- What is renter’s insurance? The tenant’s obligation is to be responsible for damage caused to the apartment or its facilities due to error or carelessness, and to bear responsibility for damage caused to third parties. The landlord usually wants insurance to cover this tenant liability.

4.- What is insurance against non-payment of rent? Covers rent non-compliance by the tenant. This insurance covers the payment of rent owed up to the maximum number of monthly installments specified in the insurance policy.

5.- Regarding the last two, what clauses should each of them contain so that both the tenant and the owner feel protected? With the new Law on Urban Leasing, based on Article 20, it is doubtful that the cost can be passed on to the lessee. We could do this with an additional warranty. But we must take into account the provisions of Article 36.5 of the Law on Urban Leasing: the parties can agree on any type of guarantee that the lessee fulfills his leasing obligations with a cash deposit. Therefore, such amount of the mentioned insurance could be transferred, provided that it does not exceed two monthly rents.

In the event that the insurance against non-payment of rent amounts to more than two monthly installments, it could be transferred if the term of the lease is longer than five years, or up to seven years if the lessor is a legal entity. The reason is that the amount of the additional guarantee can be higher than two months’ rent. In order to be binding on the parties, the clause must be drafted within the above parameters.

5.- Considering the new housing law, how should property owners act in case of squatting? It would be correct to initiate legal proceedings, civil or criminal, depending on the legal situation surrounding squatting. In order to avoid procrastination or delays, and even the filing of a lawsuit, it is convenient for a lawyer to examine the situation and check the existing evidence.

6.- What is the best way to proceed in case the tenant stops paying the rent? It is always recommended to make a prior written request, which determines the amount of the debt and requires voluntary payment within the deadline given to the tenant. In the event that you fail to comply with such a request, you will be notified of the commencement of an eviction trial. You can also offer to hand over the keys to the house, after studying the payment plan for down payments offered by the tenant.