A tenant’s failure to pay rent is a major concern for any homeowner. Understanding which legal options are effective in handling this type of situation is essential to avoid potential headaches. We invite you to continue reading to learn more about this topic.
In Spain, a landlord may begin legal proceedings after one month of non-payment of rent. To do so, once the lease agreement has been signed, it is necessary to establish a specific payment deadline, for example, requiring the tenant to pay within the first seven days of the month. If the tenant does not pay within that period, the landlord may initiate legal proceedings.
If you’re dealing with a tenant who hasn’t paid rent, the best approach is to start by talking to them to reach an amicable agreement. If you’re unable to reach an agreement, it’s advisable to take legal action. Here are the steps you can take in this situation:
Before taking any legal action, it is advisable to review the rental or lease agreement to verify the clauses and penalties previously established in the event of a failure to pay. Sometimes the agreement already includes standard clauses that specify actions to be taken in the event of nonpayment, such as late payment interest or immediate termination of the agreement.
If the contract does not include these provisions, you must proceed in accordance with current Spanish legislation, under which the landlord has up to 30 days to file a claim for non-payment.
If the tenant does not respond, send them a notarized letter requesting timely payment. The letter should specify the amount owed, the payment deadline, and the consequences of nonpayment. If the tenant ignores the letter and fails to pay on time, you may initiate the eviction process.
This refers to the legal action that requires the tenant to pay the rent owed and is part of the legal process to seek eviction. We will provide more details about this process later.
If the tenant continues to fail to pay the rent, here is a guide on how to proceed:
As mentioned, the first step before initiating the eviction process is a notarized letter or burofax requesting the tenant to pay the outstanding debt. It is recommended that this letter specifies a set deadline for payment, for example, 15 days, to allow the debtor to pay voluntarily. If nonpayment persists, the eviction lawsuit is filed.
It is the legal tool that allows property owners to regain possession of the home or premises in the event of non-payment of rent by the tenant. It is filed in the court of first instance when the tenant continues to evade payment of rent after receiving the notarized letter. This requires the intervention of a lawyer to sign the lawsuit, which seeks to evict the tenant and recover the rent.
Stages of the eviction process:
You might be interested in: What is eviction?
This involves claiming payment of overdue rent, which can be done either as part of the eviction proceedings or through a process known as a payment order; we will go into more detail about the latter.
The minimum timeframe for a rental eviction to take effect can be as long as six months. In some cases, it can extend to 12 months. Factors that can influence the length of this process include the caseload of the courts, where a backlog of cases leads to delays in resolving them; another reason could be the tenant’s opposition, which involves filing motions for extensions or submitting arguments.
There are also cases that may take longer if the tenant is in a vulnerable situation. Finally, the trial date begins to run from the date of service of process; if service is delayed, so are the rest of the proceedings.
If you have already regained possession of the property but the tenant still owes rent, you can do the following:
You can file what is known as a summary debt collection procedure (procedimiento monitorio) before the Court of First Instance to claim the debt. To do so, it is important to gather all supporting documentation, such as the initial registered notice (burofax), unpaid invoices, and any communications exchanged with the tenant.
The court will send a notice to the tenant demanding payment within 20 business days. If payment is made, the case will be closed.
If the debt is not paid, the judge will have the power to issue an enforcement order allowing the seizure of assets or bank accounts in the tenant’s name until the total outstanding amount is paid.
Under the Civil Procedure Act (LEC), various types of the tenant’s property may be seized:
Money and bank accounts: As mentioned, the judge orders the bank to freeze the tenant’s account and transfer the funds until the debt is paid. If the funds are insufficient, other assets are seized.
Wages and pensions: The tenant's income may be seized, although it is mandatory to respect the amount of the Minimum Interprofessional Salary (SMI), which is unseizable. This means that if the tenant earns less than the SMI, their salary cannot be garnished. If the income exceeds the SMI, the percentage subject to garnishment will be determined according to the scale established by the Civil Procedure Act (LEC).
Personal property and real estate: Assets such as jewelry, vehicles, household appliances, works of art, or any other valuable property owned by the tenant may also be seized. In serious or extreme cases, real estate may also be seized.
No attachable assets: If the tenant does not have any attachable assets, they may request that the debt remain outstanding until they have income or assets. This means that the landlord will have to wait for some time—which, unfortunately, may be quite a while—before receiving actual payment of the outstanding amount.
There are several strategies that property owners can implement before entering into a lease agreement in order to avoid unfavorable situations, such as non-payment.
It is advisable to conduct a financial solvency assessment in which the tenant provides bank and employment certifications to verify that they will be able to pay rent in the medium and long term.
It is advisable to request documentation from the tenant such as pay stubs, employment contracts, tax returns, or bank statements. With this information, you can verify that they have sufficient and stable income to pay the rent.
The Real Estate Delinquency Database (BDMI) is a registry that provides access to useful information to help avoid entering into lease agreements with individuals who are reported as repeat debtors.
You can include a security deposit in the lease agreement; under rental law, this can cover one month’s rent. You can also request an additional guarantee to cover a second month’s rent or to provide protection against non-payment.
Maintain strict control over payments by agreeing on an automatic payment method, sending reminders in case of delays, and acting quickly in the event of nonpayment.
If possible, obtaining references from previous landlords will allow you to assess whether it is worth proceeding with the lease agreement with the tenant.
Rent default insurance is an excellent way to protect against unpaid rent. To purchase this type of insurance, the insurer first reviews the tenant’s profile to assess their creditworthiness; generally, the tenant must have a permanent employment contract or provide proof of a stable monthly income.
If the tenant stops paying, the insurance company will compensate the landlord for the monthly payments up to the contracted limit, which may range from 6 to 12 months. They also provide legal assistance to file an eviction claim against the tenant.
Some insurance policies include additional benefits such as coverage for damage caused by vandalism committed by the tenant, coverage for unpaid utilities, and legal assistance.
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Nonpayment of rent is a common concern among property owners who seek to generate income from leasing a property. It is essential to conduct a thorough screening of potential tenants, assess their financial solvency, review delinquency records, and include clauses that cover a couple of months of rent in order to initiate legal proceedings if necessary. With careful strategic planning, you can manage a rental property without major headaches.
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