Understand the difference between seasonal rentals and primary residence contracts in Madrid. The seasonal rental contract is a model of rental housing exploitation that often leads to confusion.
What is a seasonal rental agreement?
The seasonal rental contract is within the types of contracts established by the Urban Leases Law (LAU in Spanish), specifically in the category of “use other than housing.”
This type of contract is made for stays that do not aim to establish a home or permanent residence. Nor are they contracts for tourists.
Its main characteristics are defined by having a specific duration of time, having the habitual residence elsewhere, and having a defined purpose that is not the habitual residence or the tourist stay, such as work, study, or medical situations. The fundamental difference between this contract and the habitual residence contract is the transitory nature, since the aim is not for the stay to be stable.
The duration of the seasonal rental
The law does not establish a specific duration for the seasonal rental contract, but it does establish that it must be defined in the contract. The duration of the contract is in the hands of the landlord and the tenant. In general, it is assumed that the contract has a maximum duration of one year, although there are discrepancies in this regard.
In consequence, in the event of early termination of the lease, the tenant may be subject to compensation, unless otherwise specified in the lease. This compensation can be equivalent to the total monthly payments outstanding until the end of the contract.
Renewal of the seasonal rental agreement
Be aware that the extensions of the seasonal rental contract are subject to the agreement of both parties, but if agreed, a new contract must be signed. Unlike leases for a primary residence, the renewal of a seasonal rental is for a shorter period, usually less than one year, and as long as the original purpose of the contract is maintained.
Therefore, renewals of seasonal contracts are possible but not at all recommended. If a one-year renewal is granted, it can be assumed that a stay of habitual residence has been camouflaged with an annually renewable seasonal rental contract and that the contract used is the wrong one.
It is indisputable that with several one-year renewals, they are trying to avoid a habitual residence contract, and any judge will ratify this opinion if it reaches the courts. This is another difference between a seasonal rental and a habitual residence.
Termination of the contract before its expiration date
In both types of contracts, both primary and seasonal residences, there are legal reasons to terminate the contract, such as non-payment of rent, damage to the property, refusing to make necessary repairs or causing inconvenience to other tenants or neighbors, or changing the needs of one of the parties.
However, in the temporary seasonal contract, as it is a commercial agreement, the ideal is to renegotiate the contract in good faith; if this is not possible, it is essential to follow the provisions stipulated in the rental contract.
Learn more about rental profitability
If you are looking to make a home profitable, in this article we offer you a comparison of profitability that differentiates between seasonal rental and habitual residence. If you want to know more about the different forms of renting, we offer you additional information on ways of operating a rental property.
In addition, we highlight the importance of having a good property Management company in Madrid , better a company that has access to different types of tenants, HHRR departments, and not a traditional street agency—as the best way to maximize security as well as revenue.
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