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What happens to signed contracts, how to terminate the current one and the keys to making new ones - La Nación Propiedades
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Qué pasa con los contratos firmados, cómo rescindir el que está vigente y las claves para hacer los nuevos
Hay quienes tienen contratos bajo la ley del 2020, quienes firmaron con los cambios de hace dos meses y quienes, a partir de que entre en vigencia el DNU de Milei, acuerden con las nuevas condiciones. Qué pasa con cada modalidad de contrato de alquiler vigente.
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December 22, 2023
There are those who have contracts under the 2020 law, those who signed with the changes two months ago and those who, as soon as Milei's DNU comes into effect, agree to the new conditions. What happens with each type of current rental contract.
By: Veronica Ruby
The keys to the contracts signed in the last three years and what the new ones should be like from the DNU of Javier Milei Shutterstock
The president Javier Milei announced his megadecree with a package of measures that no one had ever dared to take before. Among them, the repeal of the “disastrous” rental law (as described in the decree), something that has been talked about so much and speculated but there had never been any progress in its completion.
In July 2020, rental law 27,551 was passed, which received changes in some of its points in October 2023 through the Law 27,737, in force since October 18 of this year.
Milei announced a decree to deregulate the Argentine economy that eliminates numerous laws and regulations, including the rental law
After having gone through extensive debates in committees in May 2022 without achieving anything, finally this year Congress returned to the issue of repeal or modification to the norm in force between August and October, both in the Chamber of Deputies and in the Senate. And changes were made to the norm in mid-October last year.
Since always, the leader of La Libertad Avanza was in favor of the repeal because for him The changes were a “waste of time” since he considered that the law as it was will not advance or solve the underlying problem in the real estate market between tenants and owners.
He had already anticipated it when he won the elections. In his first interview as president-elect he stated that this rule must “repeal it and understand that it is a contract between parties. The only thing the rental law has done is cause damage. He ended up harming those he intended to protect.” And he complied. The megadecree titled “Bases for the reconstruction of the Argentine economy” was published in the Official Gazette which includes the repeal of the rental law 27,551, which was sanctioned in July 2020 and was modified last October 2023 with 27,737.
Although Javier Milei said that his decree takes effect from today, this is not the case. if they do not determine a period, they come into force after the eighth day of their publication, presidential decrees, like laws. The DNU does not specify when it comes into force and, therefore, when a date is not stipulated, the general rule applies, which establishes that.
The eighth day rule arises from the Civil and Commercial Code (formerly the Civil Code), which in article 5 says: “Validity. The laws take effect after the eighth day of their official publication, or from the day they determine.” The law that established the regime of the decrees maintains that they have “full validity in accordance with those established in article 2 of the Civil Code.
Therefore, as of the officialization of the decree, lease contracts are once again under the Civil and Commercial Code with some modifications introduced in the aforementioned DNU.
That is to say, tenants and owners will be distributed for a long time among those who have contracts under the 2020 law, those who have contracts under the law with changes of 2023 and those who sign contracts from the officialization of the DNU under the new conditions of the Civil and Commercial Code.
What are the contracts signed from 2020 to October 2023 like?
The rental law which came into force in July 2020 introduced the following points regarding rental contracts:- The minimum contract term went from two years to three years with this law.
- The adjustment must be made annually (not every six or three months) under the Contract Index of Location (ICL) published by the Central Bank, made up in equal parts of the monthly variations of the consumer price index (CPI) and the average taxable remuneration of stable workers (RIPTE) that It is a salary index.
- The guarantees to be presented by the tenant were expanded with a range of possible guarantees being possible: the title of ownership of a property, a bank guarantee, surety insurance, a guarantee of surety or joint guarantor or a personal guarantee of the tenant, which is documented with a salary receipt, income certificate or any other reliable means.
- The tenant did not have to pay extraordinary expenses but only those that derive from habitual expenses, understood as those that are linked to the normal and permanent services available to the tenant . The extraordinary amount must be paid by the owner.
- Nor must the tenant pay those taxes that are levied on the property -such as real estate tax-.
- The security deposit cannot be for an amount greater than the amount equivalent to the first month's rent and, at the end of the contract, the owner must return the deposit “by delivering a sum equivalent to the price of the last month of the rental, or the proportional part if a deposit of less than one month's rent has been made.
- To terminate a contract the law says that it can be resolved by the tenant when notification to the owner is made with an advance notice of three months or more, after at least six months of contract. And the payment of compensation does not correspond to this concept. If six months have passed into the contract, the tenant must notify the owner of his decision at least one month before . If it is terminated within the first year of the contract, you must pay the owner a sum equivalent to one and a half months' rent at the time of vacating the property and one month, if the decision is made after the first year.
- In case of an emergency repair, if the tenant informs the landlord and receives a refusal or failure on their part to solve the problem, they can take action to pay for the repair by itself after 24 hours of notification and, in the case of non-urgent repairs, after 10 calendar days. In such cases, the tenant can deduct the value of the arrangements from the rental price.
- The owner has the obligation to declare the lease contract before the Federal Administration of Public Revenues of the Nation (AFIP).
The rental law that came into force in July 2020 influences contracts signed until October 2023.
What are the contracts signed from October 2023 to the DNU?
Under the norm 27.737, in October of this year changes were introduced to some of its points through the< a i=3> law 27,551, which is the one that governs from that moment until what is determined in the DNU of Javier Milei:- The adjustments can be made at least on a semi-annual basis (not just annual).
- The adjustment must be made under the Home Own index (no longer under the ICL)
- The owners will not be able to request payment of months in advance from the tenant.
- The requirement that rental advertisements be made in national currency (pesos).
- The owners will be exempt from paying Personal Property for the properties they use for rent
- The exemption from paying the monotax for income from the rental of up to two properties.
- The possibility for both parties to deduct 10% of the annual amount of the rental contract from Income Tax.
- They will not pay the tax on the check in the bank accounts intended to collect those contracts that are duly registered with the AFIP.
- The obligation to register contracts with the AFIP is maintained , in accordance with the provisions of current law.
What are the new contracts like after the DNU comes into force?
From the moment the DNU of Javier Milei comes into force, the contracts return to be under the Civil and Commercial Code with absolute freedom between the parties on the most important points:
- The term of the housing rental contracts will be the one that the parties have established, there is no minimum legal term. If they do not clarify it in the contract, it will be two years (no longer three years).
- The parties may agree on the adjustment of the rental value and the use of any index will be validagreed by the parties, public or private, expressed in the same currency in which the rents were agreed. That is to say, it is no longer mandatory to use the Rental Contract Index (ICL) used by contracts signed after July 2020 or the Own House index that is applied to the few contracts that were signed between last October 18 and today. .
Contracts signed from today will not be governed by any law. They are again under the Civil and Commercial Code.Fabian Marelli
- Tenant and owner will also be able to agree on how often to update the contract (no longer a semi-annual minimum as the change to the law that has been proposed annually since 2020).
- Contracts may be made in legal tender (pesos) or in foreign currency (dollars, euros or another) decided by the parties. The tenant may not demand that payment be accepted in a currency other than that established in the contract. Housing rentals will be allowed to be published and signed in foreign currency (there is no longer the requirement that it be only in pesos) and judges will not be able to convert the price to pesos, unless the agreement says otherwise.
- Judges cannot modify the form of payment or the currency agreed upon by the parties nor do they have the power to modify the stipulations of the contracts, except at the request of one of the parties. parties when authorized by law.
- The parties may freely determine the amounts and currency delivered as bail or security deposit, and the manner in which they will be returned to the finalize the location
- The parties will freely agree on the frequency of payment, which may not be less than monthly.
- The tenant may, at any time, terminate the contract by paying the equivalent of 10% of the balance of the future rental fee, calculated from the date of notification to the date of termination agreed in the contract. The tenant may also terminate the contract if the owner does not comply with his obligation to maintain the unit in conditions suitable for use, except when the damage has been caused directly or indirectly by the tenant.
- Contracts should no longer be registered with the AFIP.
How you can terminate a current contract and what happens to the current ones
In this context, a question resonates between owners, tenants and real estate agents. What will happen to the rental contracts in force after the DNU? The question fortunately has a simple and linear answer: “The law is not applied retroactively unless expressly provided,” said Enrique Abatti, lawyer and president of the Chamber of Property Owners of Argentina. In other words, a change or repeal of the law does not affect ongoing contracts.
The expert explained that what is expressed in the DNU applies to contracts that are signed after the officialization of the DNU after its publication in the Official Gazette. So “the contracts in place will remain in force” , he clarified. The same thing happened when the rental law was passed in July 2020 and then in October there were changes, the contracts that were in force maintained their conditions until their end.
A change or repeal of the law does not affect ongoing contracts.Shutterstock - THE NATION
The new contracts that will be signed when the measure becomes official are those that must be under the DNU guidelines. And those who are under the previous rule (27,551 or its modified 27,737) when they reach their expiration date have two alternatives: extend or start a new contract. In the meantime, they are valid until their termination.
The extension is a tool that allows maintaining the conditions of a contract even if a new law is passed or, as in this case , the Civil and Commercial Code applies. Extensions can extend an agreement up to 20 years. This can be used as long as the property and the parties are the same, so if the tenant or property changes, a new contract must be started with the guidelines of the decree.
Mostly, the owners decided to extend the contracts to “dodge” the rental law and maintain the rules of the initial contract if it was signed before the sanction of rule 27,551, to maintain the previous two-year period, the agreement between parties on times and modes of adjustment, between others.
With the announcement on the national network, Abatti says that “this morning there were many people who want to terminate the current contract to make a new one with these guidelines”. To do so, simply the parties must agree. “But it is a matter of the owner convincing the tenant, because someone who recently signed a three-year contract with semi-annual update for Own House (since October) or for annual ICL (before October) "You will not want to move to this new modality where there is absolute freedom to define deadlines, adjustment periods, index, among other freedoms that the DNU brings." Once again, everything will depend on the agreement of wills.
What does the freedom of terms, adjustments and payment currency imply?
The decree enables absolute freedom between the parties in three key points: the term of the contracts, the period in which the adjustments will be made and the index that will be used to define them.
Contracts may be made in pesos, dollars and other foreign currency decided by the parties.Shutterstock
Regarding these freedoms, Abatti considers that “put in these terms, the contract terms may be one year or less if the parties agree, also the indexation can be monthly if the owner so wishes and The tenant accepts it, through an index that they also agree on between them. It is key that, for example, if the payment is made in dollars or euros, the indexation can now be done according to the index or inflation of the country that has that currency. For example, in dollars it can be indexed with the inflation of the United States and in euros with that of a European country, according to the foreign currency determined for the contract.”
The lawyer also says that “I had been making contracts with quarterly indexation for my clients but this morning an owner asked me if she could make the adjustment monthly. I responded that from the DNU yes because no one prevents it, if the tenant accepts it.”
As a light of hope in this darkness in which the rental market has been sunk in the last three years, with little supply, sky-high prices, excessive increases, loss of profitability for owners, among other inconveniences, the real estate market views this measure very favorably when considers that The changes will be beneficial for tenants and will encourage those owners who took their properties out of rental to return them to the rental housing market, making the supply grow in a few months.
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