ROYAL DECREE LAW 11/2020 MEASURES WITH RENTAL CONTRACTS AND EVICTION PROCESSES

2020-04-21

1. Can all tenants benefit from the measures approved by the Royal Decree Law 11.2020?

The measures only affect rentals for the use of housing that is compulsorily subject to the Urban Rentals Law, and provided that a series of requirements specific to each type of measure are met.
In any case, all of these measures are linked in one way or another to the fact that tenants are in a vulnerable situation due to COVID-19.
Housing contracts not subject to the Law on Urban Leases, leases for use other than housing (buildings, premises, etc.), rural or industrial are excluded from the application of the approved measures.

2. What type of protection measures for tenants are included in the Royal Decree Law 11.2020?

Four types of measures have been approved:

– Firstly, an exceptional suspension of eviction procedures and contract releases (commonly known as evictions) which comes under contracts for standard residency,

– Secondly, an extraordinary extensión of the duration of some standard residency contracts,

– Thirdly, a moratorium or waiver of rental income for some contracts for permanent housing in which the lessors are large holders or public housing companies or entities, and provided that the lessees enter into a situation of vulnerability due to COVID-19, with the possibility of voluntary agreements other than those provided for in the regulation, and even with the possibility of agreements between lessors and lessees when the lessors are not large holders or public housing companies or entities, and

– Finally, assistance and administrative measures to provide financial support to tenants who find themselves in a vulnerable situation due to COVID-19.

3. How do is economic vulnerablility due to COVID-19 defined?

In order for someone to be considered vulnerable due to COVID-19, the following criterion must apply to them:

a) The person who is obliged to pay the rent has (1) become unemployed, (2) Temporary Employment Regulation File (TERF), or (3) have reduced their working day due to care responsabilities, (4) if they are a business owner, or they are in other circumstances that have caused them to have had a substantial reduction in their income.

b) During the previous month, the combined income of the family does not reach the request for the moratorium, in general, the limit of three times the monthly Public Indicator of Multiple Effects Income (hereinafter PIMEI), i.e. 537.84 There are personal situations (dependents, disabilities…) that make this limit increase.

c) That the rental income, plus the bills and basic provisions, is more than or equal to 35% of the net income of both earners in the family. In this sense, “basic expenses and supplies” of the main residence means the amount of the cost of the supplies of electricity, gas, heating oil, running water, fixed and mobile telecommunications services, and any contributions to the owners’ association.

d) In any case, economic vulnerability as a result of the health emergency caused by the COVID-19 for the purposes of obtaining moratoriums (and, we understand, condonation) or aid in relation to the rental income of the habitual residence will not be accepted when the person who rents it or any of the persons who make up the family unit that inhabits it is the owner or usufructuary of a residence in Spain).

In terms of the determining the criteria for deciding whether a person can be considered as a vulnerable individual due to COVID-19, these will be regulated in article 6, as well as establishing ways of determining the criteria mentioned previously, includes the obligation of the tenant to provide a declaration explaining that they fulfill the requirements in order to be considered “lacking in enough economic resources, according to the Royal Decree Law” and that, in addition it could be used temporarily to make up the absence of other documents which are specified in detail in the regulations, on the basis that these documents have to be provided within 1 month of the end of the alarm state.
Tenants shall be liable for damages arising from the improper application of the moratorium or remission or improper access to public assistance on the grounds that they do not meet the conditions laid out in Article 5, without prejudice to any other administrative or even criminal consequences.

4. What are the conditions for being able to suspend eviction procedures and contract releases that would affect residences?

In order for the eviction and contract release procedures to be suspended, they need to be (i) based on housing contracts, and (ii) that the tenant declares before the court that they are in a financially vulnerable situation due to COVID-19 which therefore prevents them from providing for themselves and their family.
The suspensions will affect releases and to the hearings pending in all types of eviction proceedings, and will also affect the eviction proceedings for non-payment of rent or similar amounts, as to the suspension of the hearings and the time limit set in Article 440.3 LEC of 10 days of the notice for the tenant to vacate the property, pay the plaintiff or, if he intends to enervate, pay the entirety of what he owes or deposit in the court or notary the amount of the amounts claimed.
The regulation does not specify the duration period for suspensions. It only mentions the regulation that suspends the release and that the Legal Counsel of the Administration of Justice will be aware of the tenant who is in a vulnerable situation. In any case, it would be worth evaluating whether the suspension period is the same as the rest of the assumptions metioned below.
With regard to the suspension of hearings in any type of eviction procedure, as well as the suspension of hearings and the time limit of the 440.3 LEC in eviction procedures due to non-payment, it is established that the suspension will operate until the measures that the competent social services consider appropriate are adopted, for a maximum period of six months from the entry into force of this Royal Decree-Law (that is, until 2 October 2020 at the latest).
Furthermore, the Legal Council of the Administration of Justice should take any posible situation of vulnerability because of COVID-19 of the landlord into account when deciding on a suspension deadline.

5. Under which circumstances can rental contracts be extended?

The measure only affects primary residence contracts, whose compulsory extention periods (article 9.1 of the LAU) or tacit extention (article 10.1 of the LAU) end during the state of alarm (for now, until 26th April 2020) or in the two months following its end, and and consists of these contracts being extended extraordinarily for a maximum period of six months, during which the rest of the terms and conditions of the contract in question will remain in force.
It should be noted that Royal Decree-Law 11/2020 of 31 March sets a maximum time limit, but not the procedure. In any case, lessees and landlords are allowed to reach other types of agreements regarding this extension, without clarifying whether such agreements can agree on conditions for the extraordinary extension that are more detrimental to the lessee, i.e. an extension of less than the indicated period of a maximum of six months or on terms and conditions more detrimental to the lessee than those currently governing such contracts, However, if no other agreement is reached, the lessor must bear the extension as defined in the rule (it must be understood, as nothing to the contrary is said, that the lessee is not up to date with the fulfilment of his obligations – payment or other – or becomes in default of such obligations).

6. Under what conditions is it possible to obtain a remission or deferment of rental income?

A remission or deferment of rent may only be obtained for contracts in which the lessor must be a public housing company or entity or a large holder, understood as a natural or legal person that owns more than ten urban properties, excluding garages and storage rooms, or a constructed area of more than 1,500 square meters. Also affected are all leases corresponding to the Social Housing Fund derived from Royal Decree Law 27/2012 of 15 November.
It is necessary, in order to obtain a remission or deferment of rent: (i) be in a situation of vulnerability due to COVID 19, and (ii) request from the landlord before 2 May 2020 either a 50% reduction in rent for the duration of the alarm state, or the deferment of the payment of rent accrued during the alarm state and up to 4 more monthly rent payments. The rent will be deferred up to three years after the lifting of the alarm state or 4 months after it, provided that the contract remains in force, or until the end of the contract term if not.
The deferment shall not entail the accrual of interest.
In the absence of the landlord’s choice, within 7 working days, the above-mentioned deferral will be applied.
The previous agreements between landlords and tenants affected by these measures, and which involve some remission or moratorium, will be respected. We understand, although there is nothing in the regulation, that the agreements between the parties that are made after the entry into force of the Royal Decree-Law and that are more beneficial to the lessees will also be respected.
The influence that the lessor may be in a vulnerable situation because of the COVID-19 is not regulated in this case.
In any case, this moratorium or remission obtained will cease as soon as the lessee begins to receive, if applicable, the transitional financing aids, regulated by the standard.

7. Do waivers or deferments affect other payments due to landlords, or just rent?

Both the deferrals and the write-offs regulated by the standard affect exclusively the rental income, and therefore do not affect other payments due by the lessee to the lessor under each rental contract (expenses, rubbish charges, IBIs, community fees, etc.).

8. What are the grants that have been approved and which tenants are affected?

The first of the approved aids (Art. 9) consists of an authorisation for the Ministry of Transport, Mobility and Urban Agenda to develop, by means of an agreement with the Institute of Official Credit, a line of guarantees so that banks can offer transitional financial assistance to people who are in a situation of supervening vulnerability due to COVID-19 (in accordance with the criteria and requirements defined through an Order from the aforementioned Ministry which has already been published in the BOE on 12 April) and which will include in any case and at least the situations defined in Article 5 of the Royal Decree-Law), so that they can pay the rental income (up to six months’ rent) with a return period of up to six years, exceptionally extendable for a further four, and in no case accruing any costs or interest for the applicant, and with full State coverage for banks. This agreement between the Ministry and the ICO will be for a period of 14 years, on the understanding that this will be the period within which the State must reimburse the amounts not returned to the banks by the beneficiaries of the aid.
All tenants who are in a situation of vulnerability due to COVID-19 can access this aid, although those tenants whose landlords are not large holders or public housing companies or entities must first request a waiver or deferment of rent from the landlords, and only in the event that they do not reach agreements with their landlords, can access this first line of aid.
Secondly, it is agreed that a new programme of direct rental assistance will be incorporated into the State Housing Plan 2018-2021 for people with transitory problems in order to attend to the partial or total payment of rent and fit in with the cases of supervening economic and social vulnerability that are defined and that will include in any case, and as a minimum, the situations defined in Article 5 of the Royal Decree-Law. The amount of this aid will be determined by the competent bodies of each Autonomous Community and of the cities of Ceuta and Melilla, with a limit of 900 euros per month and up to 100% of the rental income or, where appropriate, up to 100% of the principal and interest of the loan taken out to pay the rent for the permanent home.
Thirdly, an Order of the Ministry of Transport, Mobility and the Urban Agenda will replace the Programme of Assistance to Persons in a Situation of Eviction or Launching of their Habitual Housing of the State Housing Plan 2018-2021, with the new “Programme of Assistance to Victims of Gender Violence, Persons Subject to Eviction from their Habitual Housing, Homeless Persons and other Particularly Vulnerable Persons” with the aim of providing or facilitating an immediate housing solution for these persons
The Ministry of Transport, Mobility and the Urban Agenda will also modify the programme for the promotion of rental housing and measures will be taken to mobilise economic resources between administrations.

WORKING EXAMPLES

What do I do if my tenant calls me on the phone and tells me that he is not going to pay me April’s rent because he has been affected by an ERTE?
In this case we recommend landlords, without prejudice to any voluntary and personal decisions they may wish to make in good faith to help their tenants,
(i) (i) if the lessor is not a large holder or public housing company or entity, to explain to their tenants that non-payment of rent is not legal, and that at most, if they can prove the legal requirements of economic vulnerability due to COVID 19, to follow the legal procedure set out in the Royal Decree-Law, Article 8, so that tenants can access the aid referred to in Article 9 (the first of the aid explained in this video above), The lessees are obliged to pay the rent for April, as well as the rest of the payments due to the lessors, in accordance with the corresponding lease contracts, on pain of breach of contract for non-payment of rent and similar amounts and therefore on pain of eviction by the lessor.

(ii) if the lessor is a large holder or a public housing company or entity, require the lessee to prove the legal requirements of vulnerability due to COVID 19, in order to agree on the remission or postponement of the April rent, following the legal procedure of Article 5 of the Royal Decree-Law.

 

What do I do if I’m self-employed and I haven’t had a bill since March 14, when the state of emergency was declared?

Freelancers must confirm that in March they meet the legal requirements to ask their landlords for a waiver or moratorium on rent payments, through the established legal procedure.
If the lessors are large holders or public housing companies or entities, the lessee will be entitled, at least, and unless there is a prior or subsequent more beneficial agreement, to defer rent
And if the lessor is not a large holder or a public housing company or entity, he or she can access the aid referred to in Article 9 of the regulation. If the legal requirements for considering the self-employed person as vulnerable due to COVID 19 are not met in March, they can be met in April.
In any case, the request for postponement or remission of income must be requested before 3 May 2020.
It is important to emphasize that the regulation does not explain whether the granting of the postponement or remission has retroactive effects to the moment the situation of vulnerability caused by COVID-19 occurs.

 

Author: Juan Gonzalo Franch

 

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