NEW MEASURES TO SUPPORT TENANTS IN VULNERABLE SITUATIONS AND OTHER MEASURES AIMED AT CONSUMERS AND USERS, APPROVED BY ROYAL DECREE-LAW 11/2020, OF MARCH 31, WHICH ADOPTS URGENT COMPLEMENTARY MEASURES IN THE SOCIAL AND ECONOMIC FIELD TO FACE COVID-19.
As a consequence of the health and economic crisis caused by the COVID19 pandemic, the Spanish Government has issued Decree-Laws adopting a series of measures to respond to the different crisis situations that are developing. The latest of these Decrees is 11/2020, of March 31 (hereinafter RD).
In this note we will focus on summarizing the new measures adopted, in this last RD, in relation to habitual dwelling lease contracts and measures for the protection of consumers and users. We miss in this regulation a mention of leasing contracts for business premises.
Beforehand, we will now explain what is meant by being in a situation of vulnerability, since the following measures are aimed at this group.
Article 5 of the Royal Decree establishes that a person will be in a situation of vulnerability if, jointly, the following requirements are met:
(a) That the person who is obliged to pay the rent becomes unemployed, Temporary Employment Regulation Expedient (ERTE), or has reduced his/her working day due to care or other similar circumstances that entail a substantial loss of income.
In order for the above to be applicable, the income of the members of the family unit must not reach, in the month prior to the application for the moratorium:
I) In general, the limit of three times the IPREM.
II) This limit shall be increased by 0.1 times the IPREM for each dependent child in the family unit. The applicable increase per dependent child will be 0.15 times the IPREM for each child in the case of a single-parent family unit.
(III) This limit shall be increased by 0.1 times the IPREM for each person over 65 years of age who is a member of the family unit.
(b) That the income, plus basic expenses and supplies, is greater than or equal to 35 percent of the net income received by all the members of the family unit. For these purposes, “basic expenses and supplies” will be understood as the amount of the cost of electricity, gas, heating oil, running water, fixed and mobile telecommunication services, and the possible contributions to the community of owners, all of them of the habitual dwelling that the tenant must pay.
Article 6 of the RD mentions the documents that must be presented to prove the aforementioned conditions.
The following is a summary of the measures adopted in relation to habitual residence lease contracts.
- Once the state of alarm has ended, and therefore the suspension of all deadlines and procedural terms has been lifted, tenants who can prove that they are in a situation of social or economic vulnerability as a result of the COVID-19, which makes it impossible for them to find alternative housing, will be eligible for a suspension of the launching of the housing. The suspension will be decreed retroactively to the date on which it occurred for the time strictly necessary, according to the report of the social services.
- In the event that the establishment of the suspension affects lessorswho prove to the Court that they are also in a situation of social or economic vulnerability as a result of the effects of COVID-19, this circumstance will be communicated to the competent social services for their consideration in establishing the suspension period.
It should be understood that, in Spain, in 85% of housing leases, the owner is a natural person, a small owner. The purpose of these measures is to guarantee a balance between the parties that prevents the vulnerability of tenants from being transferred to landlords, especially those for whom the income generated by the rental income may be essential.
- An extraordinary extension of the term of the habitual dwelling lease contract will be applied, for a maximum period of six months, during which the terms and conditions established for the contract in force will continue to apply, for those contracts in which, from the entry into force of this Royal Decree, and until two months have elapsed since the end of the state of alarm, the mandatory extension period provided in Article 9. 1 or the tacit extension period provided for in article 10.1, both articles of Law 29/1994, of November 24, 1994, on Urban Leases. This request for extension must be requested by the lessee and accepted by the lessor.
This measure is not automatically applicable, since it must be accepted by the lessor, and therefore its effectiveness is conditional upon the latter’s acceptance.
- An automatic moratorium on the rental debt will be applied for tenants of habitual residence who are in a situation of economic vulnerability and who request it from landlords that are a company or public housing entity or a large holder, understanding as such the natural or legal person who is the owner of more than ten urban properties, excluding garages and storage rooms, or a constructed area of more than 1,500 m2. Said moratorium must be requested by the lessee within one month from the entry into force of the RD. This will not apply if the parties have already agreed to a postponement or cancellation, in whole or in part, of the rent.
The lessor will expressly notify the lessee, within 7 working days, of its decision, which must deal with the following alternatives:
(A) A 50% reduction in rent during the duration of the state of alarm and the following monthly installments if that period is insufficient in relation to the situation of vulnerability caused by COVID-19, with a maximum in any case of four months.
(B) Amoratorium on the payment of rentthat will be applied automatically and that will affect the period of time that the state of alarm lasts and the following monthly payments, extendable one by one, if that period is insufficient in relation to the situation of vulnerability caused by COVID-19, without exceeding, in any case, four months. Said rent will be deferred, starting from the next monthly rent , by splitting the installments for at least three years and always within the period during which the lease contract or any of its extensions continues. The lessee will not have any type of penalty and the deferred amounts will be returned to the lessor without interest.
- The lessee of a habitual residence contract who is in a situation of economic vulnerability, may request from the lessor, when this is not one of those included in the previous point, within a period of one month from the entry into force of the RD, the temporary and extraordinary postponement in the payment of rent, provided that said postponement or the total or partial cancellation of the same had not been previously agreed between both parties on a voluntary basis.
Once the request is received, the landlord will notify the lessee, within a maximum period of 7 working days, the conditions for deferral or deferred installment of the debt that it accepts or, failing that, the possible alternatives that it proposes in relation to the same.
If the natural person lessor does not accept any agreement on the postponement and, in any case, when the lessee is in a situation of sudden vulnerability, they may have access to the temporary financing aid program that we will see below.
- The development of a line of guarantees for financial coverage is approved, on behalf of the state, for tenants in a situation of vulnerability as a result of COVID19, so that they can meet the expenses of the housing.This line of guarantees will be made through the ICO (Official Credit Institute) so that banks can offer temporary financing aid to people who are in the aforementioned situation of vulnerability, with a Repayment term of up to six years, extendable exceptionally for another four and without, in any case, accruing any type of expenses and interest for the applicant. These aids must be dedicated to the payment of the rent of the housing lease and may cover a maximum amount of six monthly rent payments.
- A new aid program is approved, which is incorporated into the State Housing Plan 2018-2021 regulated in Royal Decree 106/2018, of March 9, to help minimize the economic and social impact of COVID-19 in habitual residence rentals, aimed at people who are in a situation of vulnerability.
The amount of this aid will be up to 900 euros per month and up to 100% of the rent or, where appropriate, up to 100% of the principal and interest of the loan that has been subscribed with the one who has satisfied the payment of the rent of the habitual residence.
Consumer Protection Measures
Article 36 of the RD regulates the following measures:
- Right to terminate certain contracts without penalty, whether they are for the sale of goods or the provision of services, including successive contracts, signed by consumers and users for whom it is impossible to fulfill them as a consequence of the measures adopted during the validity of the state of alarm. This right of termination may be exercised within 14 days from the entry into force of this RD. The resolution claim may only be upheld when it is not possible to obtain from the proposal or revision proposals offered by each of the parties, on the basis of good faith, a solution that restores the reciprocity of interests of the contract.
- In the cases in which the fulfillment of the contract is impossible in accordance with the previous point, the employer will be obliged to return the sums paid by the consumer or user, except for expenses incurred duly itemized and provided to the consumer. , in the same way in which the payment was made within a maximum period of 14 days, except for the express acceptance of different conditions by the consumer and user.
- Regarding the contracts for the provision of successive tract services, the service provider company may offer options to recover the service a posteriori and only if the consumer could not or did not accept said recovery, then would proceed to refund the amounts already paid in the part corresponding to the period of the service not provided for said cause or, subject to the acceptance of the consumer, to reduce the amount resulting from future fees to be charged for the provision of the service.
Likewise, the service provider company will refrain from presenting new monthly payments until the service can be provided normally, without this giving rise to the termination of the contract, except by the will of both parties.
- In the cases of combined travel contracts that have been canceled due to COVID19, the organizer or, where appropriate, the retailer, may give the consumer or user a voucher to be
used within one year from the end of the state of alarm and its extensions, for an amount equal to the reimbursement that would have corresponded. After the period of validity of the voucher without having been used, the consumer may request a full refund of any payment made. In any case, the eventual offer of a temporary replacement bond must have sufficient financial support to guarantee its execution.
Notwithstanding the foregoing, the organizer, or where appropriate the retailer, must proceed to reimburse consumers and users in the event that they request the termination of the contract, in accordance with the provisions in section 2 of article 160 of the revised text of the General Law for the Defense of Consumers and Users, provided that the service providers included in the package travel contract have proceeded to fully refund the amount corresponding to their services. If only some of the package travel service providers make the refund to the organizer or, where appropriate, to the retailer, or the amount returned by each one of them is partial, the consumer or user will be entitled to a partial refund corresponding to the returns carried out, being deducted from the amount of the bonus delivered for the termination of the contract.
The organizer or, where appropriate, the retailer, will proceed to make the aforementioned refunds within a period not exceeding 60 days from the date of termination of the contract or from the date on which the service providers proceeded to return it.
Article 29 of the RD establishes that exceptionally, while the state of alarm is in force, the supply of electricity, water and petroleum products cannot be suspended, including gases manufactured goods and liquefied petroleum gases and natural gas to consumers in their habitual residence, for reasons other than security of supply. To prove to the supplier that the supply is produced in the habitual residence, the consumer may use any documentary means that reliably proves said circumstance.
Likewise, the period during which the state of alarm is in force will not count for the purposes of the periods between the reliable request for payment and the suspension of supply due to non-payment established in current regulations or in the supply contracts, where appropriate.