Assignment of contract, subleasing and subrogation
In this guide you will discover the fundamentals about the contract assignment, subleasing, or subrogation in the rent of a property. Read it carefully and remember: if you have any questions you can ask one of our specialists.
What is the assignment of contract?
By the assignment of contract, the tenant of a property (assignor) transmits to a third party (assignee) all the rights and obligations agreed in the original rent. Thus, the new tenant occupies the position of the former tenant reflected in the contract. As a result, the first renting contract is ended.
Rules of the assignment of contract
- The tenant needs the express written consent of the landlord. You may not assign the lease to a third party unless it is authorized by the landlord or principal landlord.
- If the transfer occurs having the landlord’s consent, the former tenant is replaced by the new one in the contractual position of the tenant (assignor).
- When the leased dwelling is destined for a business, the tenant may assign the lease without having the landlord’s consent (who has the right to raise up to 20% the price for the rent). We will talk about this in a specific guide to transfer local business:
See also “Transfer local business“
What is the subleasing?
By means of a subleasing contract, the tenant may rent to a third party the use of all or part of the property that he has rented. Unlike in the assignment of contract, the principal contractual relationship between landlord and tenant is maintained, as well as their clauses. Therefore, a new contract is born in the same conditions and without extinguishing the principal rental contract.
Rules of the subleasing:
- May be total or partial: Urban Leases Act only allows partial subleasing. The tenant who subleases must remain in the house, otherwise it would be an assignment of contract. On the other hand, the law of rustic leases, requires that both the assignment of contract and the subleasing are made on the whole housing.
- In order to be perfectly valid, the sublease must be made with prior, express and written consent of the owner or lessor. The lessor’s consent is imperative. If not, he will automatically could terminate the contract.
- If the usage of a home is temporary and free of charge is not considered a subleasing. For example, when friends or family are visiting you. Nor when it has commercial or tourist purposes, then it is a lodging contract.
- The subleasing contract of the dwelling shall be governed by the same rules as the original lease.
- The rent paid by the subtenant may not exceed the rent paid by the tenant to the owner.
- When a business or professional activity is exercised in the rented dwelling, the tenant may sublet the property without the prior consent of the lessor (although it is advisable to be notified). He may also raise the rent by 10% of the price of the original rental contract.
- Sub-letting or subleasing is by nature an agreement resulting from the main lease contract. Therefore, it will end if the original rental is completed.
What is the right of subrogation?
Nothing last forever, so Spanish law covers what happens if the tenant dies during the term of the lease. Although the tenant is no longer alive, the contract does not have to be extinguished necessarily. The following persons can continue as tenants:
- The tenant’s spouse or domestic partner, if he or she lived with him or her.
- Tenant’s descendants, if they lived with him.
- Ascendants and brothers of the tenant who have lived with him habitually.
- Disabled persons of at least 65%, provided they are relatives of the tenant within the third collateral degree (nephew to his uncle) and have lived with him.
If there are several relatives who are entitled to subrogation, who is preferred?
They must agree unanimously who of them continues as a tenant. If they do not reach an agreement, it has preference to subrogation who has the closest kinship: 1st the spouse or partner in fact, 2nd the children, 3rd the ascendants…
Steps to follow in the subrogation
The one who is elected to continue with the lease shall:
- Notify the landlord in writing within three months of the tenant’s death
- Indicate his or her kinship with the tenant: any evidence proving that it meets the requirements established for subrogation. These tests include the family book, marriage capitulations, a common housing rental contract, etc.
- Provide him with a certificate of death of the Civil registry.
Waiver of the right of subrogation
If the lease was contracted for a period exceeding three years, landlord and tenant may agree that there is no right of subrogation, concluding the agreement.
In any case, do not hesitate to consult our lawyers about any questions you need to resolve. We’re here to help you.