By Andrés Díez Bronzini (Abogado & Rechtsanwalt)
The Spanish law maker has changed the court proceedings with regards to non paying tenants. Does this new law mean that the landlord can get his non paying tenant out in just 10 days?
Suppose your tenant is defaulting. It will take approximately 2 weeks from the day your lawyer files the claim for the overburdened court to take any decision.
If the court admits the eviction and payment claim, it will set a deadline of 10 days to the non paying tenant and force him to (1) pay the outstanding rent, (2) return the property to the landlord or (3) object the claim.
The tenant might choose a fourth option: simply do nothing and wait for the E-day (eviction day)
My pessimistic guess is as follows: based on the tenant´s decision, the proceedings may last, in the best case scenario, approximately one month; in the majority of cases it will take between 4 and 12 months. In the worst case scenarios it may take even more time to get the non paying tenants out. However, future cases will teach us the truth.
SUPPOSE YOUR DEFAULTING TENANT IS A NICE GUY
The defaulting tenant might decide to pay the rent within the 10 day deadline: if so, the landlord is extraordinary lucky and he will recover his money in an estimated record time of approximately 1 month from the day your lawyer files the claim.
The defaulting tenant might decide to hand over your property within the 10 day deadline: hopefully, the tenant leaves the property in good conditions and the landlord needs to make only a minimum investment for small repairs and cleaning to re-rent the property to another tenant. My guess is that in this scenario the landlord would recover his property in a record time of approximately 1 month from the day the lawyer files the claim.
Of course, the landlord can continue proceedings to recover the outstanding rent. However, based on my experience, most (but not all!) of the defaulting tenants don´t have any worthy assets to seize.
SUPPOSE YOUR DEFAULTING TENANT IS NOT A “NICE” GUY
The defaulting tenant might decide to object the eviction and payment claim. My guess is that in this case everything remains as before: a court hearing must take place and if the land lord is successful, the non paying tenant must be eventually forced out of the property.
The legal time periods for the court trial and the eviction are short, but the day to day court reality is that the courts are overburdened: in my opinion, it is simply impossible to shorten the eviction proceedings significantly with the current personnel and material resources. My prediction is that in the majority of cases it will take the landlord between 5 to 12 months to recover his property.
Proceedings can last even longer if, for example, the nonpaying tenant alleges he is poor and asks for a lawyer provided under the legal aid scheme. It will take several weeks until it is decided if the tenant is entitled to such a lawyer or not.
Most probably, the majority of the tenants will do nothing and just continue to live for free in the property for some time and quietly abandon it shortly before the eviction day.
First the good news: no time consuming court hearing is necessary.
Now the bad news: yes, it´s true, the court will rule that the landlord is entitled to the possession of his property and to the unpaid rent (which he most probably will not recover).
However, the landlord cannot just walk in his real estate property and take over his home. The landlord´s lawyer must apply for execution proceedings in order to obtain the possession of the property by the court. Again, the lack of sufficient court staff most probably means it will take some months until the land lord gets back his property by the court.
MINIMISE THE RISK OF LOSSES DUE TO NON PAYING TENANTS
In my opinion, as long as the Spanish administration does not grant more staff and money to the courts, the landlord will need between an estimated 4 and 12 months to recover his property. In some cases, the landlord will be able to recover his property in more or less 1 month from the day his lawyer files the claim.
So what can the landlord do to minimize the risk of losses due to nonpaying tenants?
INSURE THE TENANT BY AN INSURANCE COMPANY against non payment and damages caused by the tenant to the property. Prices (aprox. 3-5% of the annual rent) and particularly conditions differ substantially from insurance company to company. Nevertheless, in crisis ridden times plagued by high unemployment and uncertainty, it will not be easy to find a company which will insure the tenant.
NEGOTIATE A FIRST DEMAND BANK GUARANTEE if no insurance company wants to insure the tenant. Nevertheless, most (potential) tenants will walk away if you ask for a bank guarantee.
CHECK THE REGISTRY OF THE FICHERO DE INQUILINOS MOROSOS (OF DEFAULTING TENANTS). Maybe the registry has a file on your (potential) tenant confirming he has been defaulting in the past. Be aware, the registry is not exhaustive and, thus, does not include each defaulting tenant.
ARBITRATION PROCEEDINGS now make even less sense than in the past because, among other reasons, the landlord (1) can obtain a solid court ruling against his non paying tenant in an estimated 1 month instead of un uncertain arbitration award, (2) the landlord can obtain that court ruling in an estimated record time of 1 month and (3) in the majority of the cases the landlord will not need to travel to Spain because there will be no court hearing.
Ultimately, landlords just can hope that my predictions are wrong and that the lawmaker will obtain his aim of getting non paying tenants out of the property in record time. Let´s wait and see.
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