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New rentals: What is the cost of early termination and how should owners and tenants agree on it? - Infobae
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Alquileres nuevos: cuál es el costo de la rescisión anticipada y cómo deben pactarla propietarios e inquilinos
Mientras crece progresivamente la oferta es conveniente tener en cuenta qué cambia y cómo impacta económicamente rescindir antes un contrato de alquiler a partir del DNU desregulador
www.infobae.com
January 18, 2024
While the supply grows, it is necessary to take into account what changes and how it economically impacts terminating a rental contract earlier based on the deregulatory DNU
By Jose Luis Cieri
Miniature house and keys symbolize the act of renting or buying property. They represent the connection between tenant and owner, framed by regulations and the contract that seals the agreement (Illustrative image Infobae)
With the entry into force of the Government's Decree of Necessity and Urgency (DNU 70/2023), which repealed the Rental Law, there were substantial changes in the dynamics of housing agreements (article 1221 of the Civil and Commercial Code, CCyC). However, questions remain that require clarity, especially around the early termination of housing contracts.
Specifically, what are the modifications and how does the termination of the contract affect financially? Owners and tenants are looking for answers to avoid possible problems when signing these agreements and leave everything well established in writing.
Currently, the offer is increasing and from the real estate sector they affirm that little by little the owners are resuming the rental of their properties. More flexible agreements, with fewer regulations and shorter contractual terms favor the trend. The number of available properties grew from 5,500 to 7,500 on average on various portals in just 15 days , covering proposals in pesos and dollars (temporary agreements).
Gonzalo Fuertes Lerena , lawyer and coordinator of the Master of Civil Law at the Austral University, told Infobae that from now on "the tenant can terminate the contract at any time, paying the landlord 10% of the amount of the future unearned rent." . To calculate the payment, the period between the date of notification of the termination and the agreed completion date must be considered.
Regarding what persists and what is modified in the early termination regime for housing leases, the specialist explained that the possibility of early termination of the lease contract remains. “What varies is that no distinctions are made based on the moment in which the termination is carried out and the existence or non-existence of notice. It also changes the way in which the compensation that, sometimes, the tenant had to pay the landlord for terminating the contract early is calculated, as well as the economic impact that this has for the tenant,” he said.
Benefit and disadvantage
The report also referred to how the economic impact of contract termination varies and who and when benefits from the change in the DNU.To avoid distortions and since in the regime prior to the DNU a minimum contract duration of 3 years is budgeted, which does not occur with the one established by the DNU, a proportional reduction of the committed values is carried out in relation to the first, when a hypothetical contract duration of 2 years is considered.
Fuertes Lerena exemplified a model rental at a price of $200,000 per month. Regarding the duration of the contract, it is necessary to consider the situation, whether the agreed term was 3 years or 2, since the DNU reduces to the latter the minimum term of the locations for housing (always that no other term has been agreed in the contract).
If the termination takes place before the first 6 months of execution of the contract have elapsed (considering maximum hypothesis in the proposed example), while before the regime established by the DNU, $1,200,000 or $800,000 had to be paid (with proportional adjustment of the regulation of the previous regime to a more limited term (minimum duration of the contract), after which $720,000 or $480,000 must be paid, depending on whether the contract was signed for 3 or 2 years, respectively.
When the termination is carried out between 6 months and the first year of contract execution, before the DNU, if the advance notice established in the CCyC was not provided, the average of all the values worked as a hypothesis was $415,000; while, if 1 month's notice was given, the average of all the values worked as a hypothesis was $250,000, and if the notice was 3 months, no compensation should be paid. After the DNU, the average of all the values worked as hypotheses is 420,000 pesos.
If the termination takes place after the first year of execution of the contract, before the DNU, if advance notice was not provided, the average of all the values worked as a hypothesis is $332,000. If notice was given and it was 1 month, the average of all the values worked as a hypothesis is $166,600, and if it was 3 months, compensation should not be paid. After the DNU, the average of all the values worked as hypotheses is 360,000 pesos.
Options
Of the 7 variables analyzed, only in one is the DNU regime more favorable to the tenant than the previous one. That is, in 6 cases the regime prior to the DNU is more favorable to the tenant, that is, it is less onerous compared to the new one.- Termination before 6 months of contract.
- Termination between the first 6 months and one year of the contract without notice.
- Termination between the first 6 months and the year of the contract with 1 month's notice.
- Termination between the first 6 months and the year of the contract with 3 months' notice.
- Termination after the first year of the contract without notice.
- Termination after the first year of the contract with 1 month's notice.
- Termination after the first year of the contract with 3 months' notice.
This is because of the temporal segments that were analyzed (before the first 6 months; between the first 6 months and the year; and after the year), in the first of them (before the first 6 months) in the The previous CCyC regime in the matter had no impact on the granting of notice, so the opening in categories according to whether notice was not given or notice was given and, within this last option, depending on how long it was (1 month or 3 months ), does not apply.
Advance notice
Beyond the quantitative analysis, from a qualitative point of view the new regime based on the DNU on the matter seems to impoverish the treatment of the issue. “The elimination of the incidence of advance notice constitutes the clearest example,” clarified Fuertes Lerena.The advance notice and its effects, as regulated in the previous regime, constituted a reasonable element that balanced the position and interests of the parties, since it allowed the tenant to avoid or reduce compensation for termination, and the landlord was allowed to anticipate at the end of the contract and begin to negotiate a new one, in order to avoid a decrease in your income.
In order to enter into rental agreements, it is key to understand the new post-DNU dynamic that repealed the Law that was enacted in 2020 (Photo: Getty)
Thus, the reform of the DNU, with regard to the cost of termination without cause by the landlord, is, clearly, in the vast majority of cases contrary to the interests of the landlord (who usually has greater needs and less power to negotiation) and, in addition, establishes a less successful regime by eliminating what is related to advance notice.
Fuertes Lerena clarified: “The CCyC established that, after the first 6 months (because within that period the notice had no effect), the compensation that the tenant had to pay to the landlord for terminating the contract was a certain amount if there was no notice, that amount decreased if 1 month's notice was given and, finally, if the notice was 3 months, the compensation did not have to be paid."
Regarding the methodologies implemented before and after the DNU, the one that currently governs (by the DNU) is certainly simpler, it is more linear and that has something positive.
"However, by eliminating segmentation into time periods and removing the incidence of advance notice (all of which makes the system a little more cumbersome), elements are lost that allow, I understand, to compose in a more reasonable manner the interests involved (that of the tenant and the owner)”, concluded the expert.
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