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Point by point: What needs to be clarified from now on in new rental contracts to avoid problems - La Nacion Propiedades
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Punto por punto: lo que hay que aclarar a partir de ahora en los nuevos contratos de alquiler para evitar problemas
La derogación de la ley de alquileres dejó vacíos normativos que los inquilinos y los propietarios tienen que acordar y poner por escrito cuando se sientan a firmar el contrato
www.lanacion.com.ar
December 30, 2023
The repeal of the rental law left regulatory loopholes that tenants and landlords have to agree on and put in writing when they sit down to sign the contract.
By Mercedes Soriano
What needs to be clarified in the rental contract to avoid problems between owners and tenants as the rental law no longer exists and is agreed between the parties.
Javier Milei repealed the rental law and thereby deregulated a market that was already in conflict. Specialists in the real estate world estimate that the validity of the Decree of Necessity and Urgency (DNU) would mark a turning point and they hope that the freedom between the parties to agree will revive an offer in danger of extinction.
However, deregulation reached such an extent that there were some regulatory gaps that tenants and owners have to discuss, agree on and put in writing before signing a rental contract the following points:
1. How the contract will be paid
Regarding payment, “the only thing that was established is that the payment of the price is monthly, which is an imperative rule of public order,” explains Mariano Esper, a lawyer specialized in real estate matters. But there are four other essential points to take into account: the currency, the periodicity of the adjustment, indexation and advance payments.In what currency
Rents may be established in legal tender or foreign currency, as agreed by the parties. That is, they can be signed in pesos, dollars or whatever currency they agree upon . The tenant may not demand that payment be accepted in a currency other than that established in the contract.“Even judges now cannot modify the form of payment or the currency agreed upon between the parties. In this way, the judge is prevented from converting the contract that was - for example - in dollars at the official exchange rate and the owner from losing in the conversion," says Enrique Abatti, lawyer and president of the Argentine Chamber of Property Owners. Argentinian republic.
Rents may be established in legal tender or foreign currency, as agreed by the parties.
“It can happen in the northern corridor area of the city of Buenos Aires, for example, in Palermo, Recoleta or in the embassy area, where there were already several homes rented in dollars that remain that way,” says Marta Liotto, president of the Unique College of Real Estate Brokers of the Autonomous City of Buenos Aires (CUCICBA). However, the specialist is confident that in most neighborhoods' rents will continue to be charged in pesos.
Whatever currency is agreed upon by both parties, it must be written in the contract.
What indexation will be done and with what frequency will the adjustment be
Instead of using the Rental Contract Index (ICL) used by contracts signed after July 2020 or the Casa Propia index (which applied to the few contracts that were signed between last October 18 and today), tenant and the owner will be able to freely agree to which index to tie the value of the contract.
For example, they can be indexed to inflation, salary trends, the wholesale price index, the value of gasoline, a combination of indices, etc.
Regarding the periodicity of the adjustment, the parties may agree on how often to update the rental value. This possibility especially weighs on those who agree to contracts in pesos, since they run the risk of being devalued due to high inflation rates.
However, by indexing it to a foreign currency the payment also runs the risk of becoming outdated if the currency is devalued in the country of origin. In that sense, Dr. Abatti advises that “whoever agreed on rents in foreign currency can index that rent according to the country that issues the agreed payment currency. For example, if it is the dollar, you can tie it according to United States inflation.”
The parties may agree on how often to update the value of the contract.
Advance payments
Something that was previously prohibited and now becomes valid is the possibility for the owner to ask the tenant for advance payments. “Before it was only possible if the tenant offered it willingly, for example to negotiate a discount, but the owner could not demand it and now he can,” Esper summarizes.
2. Duration of the contract
For how long
The term of the rental contracts will be the one that the parties have established and, if they do not clarify it, it will be two years. . From 1921 to 2023 there was a minimum period, so this is an unknown situation for all Argentines,” says Esper.
“We will see if the uses and customs establish housing contracts for two years or not. There are going to be many special cases, three, six, eight months... taylor made, ,” adds the lawyer.
Who, how and when can terminate the contract
When the rental law was in force, the tenant could terminate the contract without giving cause once the six months of the contract had expired. In that instance, he had to compensate the landlord with the equivalent of one and a half months of the current rent amount. If he decided to terminate the contract after that period, the compensation was the equivalent of one month. In both cases, the tenant had to give at least 30 days' notice of his intention to terminate the contract.
Now the situation turns towards almost absolute freedom. “I think that there must be some limit agreed upon by the parties. As the minimum legal term no longer exists, in a contract of, for example, two years, the tenant should give at least one month's notice and could terminate after the third month, ," proposes Dr. Enrique Abatti (h), lawyer specialized in the real estate sector.
The deadlines for terminating a contract must be clarified
The recommendation arises to avoid situations that could disadvantage the parties, such as it could be that in a recently signed two-year contract, the tenant terminates after two months and with 48 hours' notice.
The DNU establishes that when the tenant terminates the contract, he must compensate the owner by paying 10% of the balance of the future rental fee, calculated from the date of notification of termination until it ends. . For example, in the case of a one-year contract, if the tenant notifies you that he is leaving in the sixth month, he would have to pay compensation of 10% that the landlord would have received for the remaining six months at the current rental price on the day in question. that returns the property.
However, the libertarian spirit of deregulation means that the owner can also terminate the contract, unless otherwise stated. “In accordance with article 958 of the Civil and Commercial Code, which legislates the principle of freedom of contract, nothing would prevent an express clause from being agreed by which the owner can terminate the contract under certain circumstances, for example, because he decides to build in the property (increase the surface),” says Abatti (h).
3. Guarantees and deposits
Define the payment and return of the deposit
There is no longer any limitation on the security deposit amount. The repealed rental law established that the tenant had to provide a fixed amount of deposit equivalent to one month's rent.
“Now it could be set based on the solvency of the tenant or the guarantor. If you are not very solvent - for example, if you do not have a property in your name or a salary that is not very high - you will have to provide a larger amount of money as a deposit,” says Abatti.
The parties must agree on the amount of the security deposit.
Abatti warns that the legal framework now does not clarify how the money is returned: “Before, it had to be returned updated according to the last rental amount. Now it is advisable to expressly agree on this to defend the interests of the tenant, for example, clarifying that it will be returned to the last month of the rent so as not to harm the tenant due to the devaluation. In that sense, it recommends setting the value of the deposit in dollar bills, regardless of whether the contract is in pesos or not.
What will be taken as collateral
The Rental Law established that the tenant had to propose two guarantee options to the owner and for the landlord to choose only one. For example, these could be a proprietary guarantee, a salary receipt, third party finance and surety insurance.Now this is subject to free agreement between the parties.
Now the choice of which guarantee can be used is freely agreed upon.
4. Repairs
Who pays for the repairs, how and when
Until the law existed, all repairs were the responsibility of the owner, unless what was broken was due to misuse by the tenant. Esper explains that the modifications made these rules stop being public order laws (mandatory) and that they remain “by default” in case it is not clarified in the contract.
The hottest point on this issue was that of urgent repairs, which were a public order norm (mandatory) and now ceased to be so. What was established before was that if, for example, the apartment began to flood, the tenant or the administrator must notify the owner as soon as possible. If within 24 hours the landlord did not send a professional to solve the problem, the tenant had the right to hire someone at his expense and charge the expense to the owner or deduct it from the following month's rent. In some cases, this caused the tenant not to analyze the market in search of the most accessible option, a fact that was detrimental to the owner.
Urgent repairs were a matter of public order and were no longer so. “It can be stated in the contract that the tenant pays it not at the expense of the owner, or that the period is not 24 hours but 48 or 72 hours, or that it will not be deducted from the rent but that the owner will reimburse the tenant in certain period,” advises Esper.
The deadline for acting on urgent repairs should be clarified
The lawyer also refers to the abusive clauses that may arise in this context. In a case such as a fire, a landlord could request that the tenant pay for the damages. “It is a clause that can be unfair, so a judge can declare it null and void because it is abusive,” he maintains.
5. Restitution of the property
How should it be delivered at the end of the contract?
Another aspect that the new regulations leave blank is the property restitution policy. Previously, it was a rule of public policy that the owner had to accept the unit regardless of the state in which it was found - for example, it could be dirty or not painted as agreed - and then the owner could claim what was appropriate.
As of the validity of the DNU, the parties can agree whatever they want regarding restitution. “The clause could be used again that if the property is not in good condition, the landlord can refuse to receive it and force the tenant to pay the rent and expenses for the time it takes to fix it,” says Esper.
Now the recurring conditions must also be stated, such as returning the property painted, clean, in good condition and uninhabited.
6. Expenses and taxes
Who pays the extraordinary expenses and the ABL
Another gap to clarify are the rules about who pays property taxes and expenses.The rental law established that ordinary expenses were borne by the tenant and extraordinary expenses by the owner. “Now, the parties can do what they want, but if you agreed that the extraordinary expenses would be paid by the tenant, you would be playing with the injustice of the clause. For example, if they paint the front of the building and it costs a lot of money, the tenant has to pay the ordinary costs plus the costs of a painting that will directly benefit the landlord and his property because this improvement increases the value of the property and who gets the The greater the value is the lessor,” analyzes Esper.
The parties can negotiate who pays the real estate tax, the ABL and the ordinary and extraordinary expenses
The lawyer believes that “what is going to change is who pays the real estate tax and the bills for the Real Estate Tax on Sweeping and Cleaning (ABL). In general, the real estate tax is paid by the owner and the ABL by the tenant, although it could be established that the entire owner of the unit pays it and it would not be abusive.”
7. Other issues
Renovations, pets, insurance and more
Just as these are the central issues, there are others that must also be clarified in the contract. For example, if renovations are allowed on the property, if it can be rented with pets, if the owner has to take out a fire policy, who pays for public services and who has civil liability for damages caused to third parties due to use of the property.
In closing, Soledad Balayan, owner of Maure Inmobiliaria, considers that “legal advice will be key in this process and the drafting of the contract as well since the level of flexibility is broad, however the market will only adjust according to what the demand validates. The real estate agencies will aim to find the best match between tenant, owner and property, where all parties agree and the conditions are mutually agreed upon.”
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