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What will happen to the signed contracts, how to terminate the one I already have and the keys to making new ones - La Nacion 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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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
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 and speculated about so much but no progress had ever been made in its finalization.
In July 2020, rental law 27,551 was passed, which received changes to some of its points in October 2023 through 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 repealing or modifying the rule in force between August and October, both in the Chamber of Deputies and in the Chamber of Senators. And changes were made to the norm in mid-October last year.
The leader of La Libertad Avanza has always been 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 by winning the elections. In his first interview as president-elect he stated that this rule must be “repealed and understood that it is a contract between parties.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 did it. Today the megadecree titled “Bases for the reconstruction of the Argentine economy” was published in the Official Gazette, which includes the repeal of rental law 27,551, which was sanctioned in July 2020 and was modified last October 2023 with the 27,737.
Although Javier Milei said that his decree applies from today, this is not the case. The DNU does not specify when it comes into force and, therefore, the general rule applies, which establishes that presidential decrees, like laws, if they do not determine another period, come into force after the eighth day of their publication. Government sources told LA NACION today that they were analyzing signing a new decree that modifies the previous one so that it takes effect immediately. 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, rental 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 divided for a long time between those who have contracts under the 2020 law, those who have contracts under the law with changes 2023 and those who sign contracts after the officialization of the DNU under the new conditions of the Civil Code and Commercial.
What are the contracts signed from 2020 to October 2023 like?
The rental law that 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 Lease Contract Index (ICL) published by the Central Bank, made up in equal parts of the monthly variations of the consumer price index (CPI) and the taxable remuneration. average of stable workers (RIPTE) which 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 surety bond or joint guarantor or a personal guarantee of the tenant, which is documented with 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 should the tenant pay those taxes that are levied on the property - such as real estate tax.
- The guarantee 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 terminated by the tenant when notification to the owner is made three months or more in advance, after at least six months of the contract. And no compensation is payable for this concept. If six months have passed into the contract, the tenant must notify the owner of his decision at least one month in advance. If you terminate 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 the case of an emergency repair, if the tenant informs the landlord and receives a refusal or failure on their part to fix the problem, they can take action to pay for the repair themselves after 24 hours of notification and in the case of non-urgent repairs, after 10 calendar days have elapsed. In such cases, the tenant may 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 under the Law like since October 2023?
Under norm 27,737, in October of this year changes were introduced to some of its points through law 27,551, which is the one that governs from that moment until what was determined in the DNU of Javier Milei:- Adjustments can be made at least semiannually (not just annually).
- The adjustment must be made under the Casa Propia index (no longer under the ICL)
- 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).
- Owners will be exempt from paying Personal Property for the properties they use for rent.
- 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?
Contracts signed from today will not be governed by any law. They are again under the Civil and Commercial Code.
Starting with Javier Milei's DNU, contracts are once again under the Civil and Commercial Code with absolute freedom between the parties in the most important points:
- The term of the housing rental contracts will be the one that the parties have established, there is no legal minimum term. If they do not clarify it in the contract, it will be two years (no longer three years).
- The parties may agree to adjust the value of the rentals and the use of any index agreed upon by the parties, public or private, expressed in the same currency in which the rentals were agreed will be valid. 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.
- Tenant and owner will also be able to agree on how often to update the contract (no longer a semi-annual minimum as stated in the change to the law that proposed an annual basis from 2020).
- Contracts may be made in pesos (legal tender) or in foreign currency (dollars 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 when authorized by law.
- The parties can freely determine the amounts and currency delivered as a deposit or guarantee deposit, and the way in which they will be returned at the end of the lease.
- 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 end date 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 . Therefore, “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.
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 norm (27,551 or its current 27,737) when they reach their expiration have two alternatives: extend or start a new contract. These are valid until completion.
The extension is a tool that allows the conditions of a contract to be maintained even if a new law is passed or, in this case, the Civil and Commercial Code is applied. Extensions, which 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 make extensions to the contracts to “dodge” the rental law and maintain the rules of the first contract if it was signed before the sanction of rule 27,551, in order to maintain the previous term of 2 years, the agreement between time parts and adjustment modes, among others.
“But now, with the existence of this DNU that proposes new conditions of absolute freedom, it is highly probable that the owners will no longer resort to the tool of extension but will choose to renew with a contract under the new guidelines,” says Abatti.
With the announcement on the national network, Abatti assures that “already this morning there were many people who want to terminate the current contract to make a new one with these guidelines.” To do so, the parties must simply agree. “But it is a matter of the owner convincing the tenant, because someone who recently signed a three-year contract with semi-annual updating for Own House (from October) or for annual ICL (before October) is not going to want to move to this new modality where there is absolute freedom to define deadlines, frequency of adjustments, 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?
Contracts may be made in pesos, dollars and other foreign currency decided by the parties.
The decree allows 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.
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 upon among themselves. It is key that, for example, if the payment is made in dollars or euros, the indexation can now also 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 monthly adjustment. I responded that from now on it is 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 drawbacks, the real estate market sees This measure is very welcome considering that the changes will be very beneficial for tenants and will encourage those owners who took their properties out of rental to return them to the rental housing market, increasing the supply in a few months.
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