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Rentals: How to terminate a rental contract and what the costs are - La Nacion Propiedades
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Alquileres: cómo rescindir un contrato de locación y cuáles son los costos
Hoy conviven tres formas: no es lo mismo haber cerrado el acuerdo durante enero tras el DNU, que en noviembre pasado o hace dos años
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February 20, 2024
Today three ways coexist: having closed the agreement during January after the DNU is not the same as last November or two years ago
By Candelaria Reinoso Taccone
After the DNU came into force and the rental law was repealed, questions remain regarding the early termination of housing contracts and compensation.
What you have to know
- President Javier Milei repealed the rental law through DNU 70/2023, which allows greater freedom in rental agreements and restores the regulation to the regulations of the Civil and Commercial Code.
- Since the implementation of the DNU, owners are reconsidering putting their properties for traditional rental, which has generated an increase in rental housing offers in the Autonomous City of Buenos Aires.
- Although the DNU does not have retroactive effect, there are differences in the terms of termination of contracts depending on the date on which they were signed, so it is important to clearly establish the conditions in the contract to avoid ambiguities.
This summary was carried out by artificial intelligence under the supervision of LA NACION editors.
A few days after taking office, President Javier Milei materialized his pre-election promise: the repeal of the rental law through the Decree of Necessity and Urgency (DNU 70/2023), issued on December 29, 2023. This act restored the regulation of rentals within the scope of the Civil and Commercial Code , marking a milestone in the search for greater freedom in rental agreements.
Consequently, tenants and owners will coexist in the market , divided between those who have contracts under the law enacted in mid-2020 (27,551), those who signed the contracts after the changes of October 18, 2023 (27,737) and those who are closing agreements since the officialization of the DNU.
Javier Milei materialized his pre-election promise by repealing the Rental Law through the Decree of Necessity and Urgency (DNU 70/2023).
Less than a month after its implementation and after years of a distorted market with low supply and high prices, owners are gradually emerging who, in the past, put their properties up for sale or transferred them to temporary rentals, after the enactment of the Law Rentals in 2020 . Now, faced with the possibility of negotiating conditions directly with tenants, many are reconsidering the option of putting their properties up for traditional rental.
This change in perspective is reflected in concrete figures. “In January the supply of properties for rent in CABA began to increase compared to December, the less than 5,000 that were published in December grew to 7,500 in the first weeks of the year, then to 8,000 and now there are 10,300 homes for rent. in the Autonomous City of Buenos Aires ,” mentions Enrique Abatti, lawyer specialized in the real estate sector and president of the Chamber of Property Owners of the Argentine Republic.
This change had a significant impact on the dynamics of housing arrangements. It not only promotes flexibility previously restricted by previous regulations, but also provides the opportunity to establish conditions more adapted to the individual needs of both parties . However, questions remain that demand greater clarity, especially with regard to the early termination of housing contracts and the corresponding compensation.
After the DNU, questions remain regarding the early termination of housing contracts and compensation.
Since the decree does not have retroactive effect, unless there is an express provision indicating otherwise, depending on the moment in which the contract was signed , the terms related to termination , such as the notice period, compensation and the deadline minimum to notify, may vary.
A key point is that although the 2020 law underwent modifications in October 2023, there were no changes regarding the termination of a contract. Therefore, only different rules apply, specifically at this point, between contracts signed before and after the promulgation of the DNU at the end of last year.
Contracts signed until December 29, 2023 under the rental law
The terms related to termination may vary depending on when the contract was signed.
Tenant: Before the DNU, the rental law in force from 2020 to December 29, 2023, according to article 1221 of the Civil and Commercial Code (CCyC) , granted the tenant the power to terminate the contract, but with some conditions:
- You can only do so six months after the contract is in force, with the obligation to notify the owner 30 days in advance and without the need to express a cause.
- If you leave the property between six months and a year, giving one and a half months' notice, you must pay a “fine” of one and a half months' rent, but if you do so with three months' notice, you pay nothing . This means that if the tenant announced to the owner of the property in the third month of the contract that he was leaving three months later (before the end), he can leave the property six months into the contract without any penalty .
- If a year has passed since the signing of the contract , the tenant no longer pays a month and a half, but rather one month of the rental value ; But if he gives three months notice before leaving, he doesn't have to pay anything either.
Owner: In contracts signed before December 29, the owner cannot terminate the contract unless he has some cause, such as in case of non-compliance by the tenant , requesting termination of the contract with cause. In other words, the existence of a minimum legal period of three years - as the old law says - must be respected, unless the tenant neglects the property, enters unauthorized persons, does not pay the rent for two consecutive months, the tenant changes the use of the home to a premises or office without the consent of the owner, if the contract states that the tenant must pay the expenses and does not do so, or according to article 1189 paragraph b) of the CCyC , the owner decides to sell the property and was previously agreed in the contract as a reason to terminate.
“Rescission for sale is carried out with prior notice stipulated in the contract, and although it is not required by law, it is customary to pay compensation to the tenant,” details Abatti. There are also cases in which the owner can compensate the tenant with money - as compensation - to make him leave the property, although it is worth clarifying that the tenant has no obligation to accept it.
Contracts signed after the DNU, as of December 29, 2023
The conditions of the contracts before and after December 29, 2023
Tenants: if the tenant wants to terminate the contract, he is no longer required to have a minimum period of validity - he no longer needs to stay six months - nor a 30-day notice, but he is required to pay compensation to the owner - as long as he does not has been clarified before and the termination is surprising. In numbers, the DNU establishes compensation of 10% of the total value of the contract remaining from termination to its end.
But at this point a dilemma arises: how to stipulate the amount if we take into account that contracts can be updated by an indicator in terms agreed upon by the parties. “If, for example, when terminating a contract the tenant has 16 months left and the total of the remaining rents is added, 10% of that value may not be the real value, since depending on the index by which they have agreed to update the rental price, the amount will be higher because it cannot be calculated in advance. This aspect, as well as the existence or not of a minimum period of validity for termination, must be clearly specified in the contract to avoid ambiguities, " warns Mariano Esper, a lawyer specializing in real estate issues and advises thoroughly clarifying every detail in the contract to avoid issues.
When signing, Abatti recommends that, due to the principle of contractual freedom of article 958 of the CCyC, the tenant gives at least one month's notice and that at least three months of the contract have passed before terminating .
Owners will be able to improve the appearance of their businesses
Owners: the main difference with the contracts that were signed under the old law is that the term of the housing rental contracts will be the one that the parties have established, so there is no minimum legal term. It is for this reason that the landlord can agree to terminate the contract for specific reasons as long as he leaves them reflected in the document he signs (previously he could only if he clarified that it was for sale).
With the 2020 law, the minimum contract duration was legally determined at three years. However, currently, this period disappears “unless the parties have not agreed on a specific duration, in which case a minimum of two years is established,” explains Abatti.
Currently, the possibilities of including clauses in rental contracts have been expanded, allowing additional issues to be addressed that allow the tenant to be evicted for reasons such as personal use , agreeing on compensation. Both parties have the right to terminate the contract at any time, as long as this is stipulated in the agreement. However, the possibility of the owner terminating the contract without specific cause can cause controversy. “If the legislator had wanted to grant this power to the owner, he would have expressed it explicitly, as in the case of the tenant,” says the specialist.
According to Esper, this flexibility favors the owner , allowing him to terminate the contract whenever there is justified cause. However, he warns that, when signing rental contracts, care must be taken to ensure that there are no abusive clauses to the detriment of the tenant. “Just because the parties agree on anything will not be totally valid, because tomorrow one of the parties can make a trial and it will be annulled if it is unjust,” she says.
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