Category: Legal advice

Marketing techniques for the production of sales materials can create commercial supports (virtual reality, hyper-realistic renderings…) of such vividness that it is difficult to distinguish it from reality.

These advertising materials are almost always accompanied by disclaimers, the length and detail of which depends on the series of American lawsuits that the lawyer writing them has seen, or on the Anglo-Saxon websites that the company’s Community Manager has copied.

Today we wonder to what extent that advertising is binding. What if the reality and the ad are “too” different?

A ruling from the Guadalajara Provincial Court has led us to reflect on this. The sentence is dated June 9, 2021. The defendant is an important development company, HERCESA. The plaintiffs were buyers of a flat in a resort on the Costa del Sol. The marketing materials said that there would be a lot of elements at the complex, such as a 5-star hotel, leisure and commercial areas, shops of all kinds…. All that was in the advertising brochure. The litigation is about marketing in its analogical form.

Since none of those elements eventually showed up at the complex, the buyers sued the developer.

The judgment places special emphasis on the fact that the basis of the obligation to compensate does not lay on the obligation to guarantee the construction of the complex facilities (which is not the property of the developer), but the loss of expectations of the purchasers that were described in the marketing materials to raise and trigger interest in the acquisition of the properties.

The basis of the ruling is not the breach of the obligation to deliver the home with the qualities and terms offered, but rather it lies in the fact that the sale was encouraged with expectations that, even depending on third parties, were included in the advertising and that influenced the decision to purchase the property.

In this sense, the ruling cites art. 61 of the General Law for the Defense of Consumers and Users, according to which “The content of the offer, promotion or advertising, the benefits of each good or service, the legal or economic conditions and guarantees offered will be required by consumers and users, even when they do not expressly appear in the contract”. It also cites jurisprudence of the Supreme Court on contractual advertising, etc.

And in the end, the court agrees with the plaintiffs. The issue of the amount of compensation is also very interesting. What it is about here is to know the “price” of those expectations of having a 5-star and luxury business in the complex. The expert of the disappointed clients values ​​this damage at 20% of the purchase price (compensation of €44,000). We would love to see that expert report, as it must be really good one. So much so that the Court “buys” it entirely from the expert, and gives the claimants everything they ask for: 44,000 €

To our developer clients: truth will out.

Judgment 37/2022 of the Constitutional Court on the Catalan law 11/2020

The Law 11/2020 of September 18 of the Parliament of Catalonia, on urgent measures regarding the containment of rents in housing lease contracts, implied that homes located in an area of ​​”housing tension” would see the rents capped and limited.

In practice, this meant that a large part of the houses that were rented in Catalonia saw their rental price limited to values ​set up by the administration. They could be previously consulted online, and that were largely lower than those that were agreed upon before the new legislation came into force.

In Judgment 37/2022, of March 10, the Constitutional Court (TC) (ECLI:ES:TC:2022:37) set up a partial unconstitutionality of the law.

What practical effects does this ruling have? Do I have to change a contract already signed in application of Law 11/2020? Can the parties freely agree on the price for the leases signed from now on? All these questions are what we will try to answer in today’s article.

The rental price was limited by art. 6 of the law. In its ruling, the TC declares that article null. But it does not do so because of the rental limit itself, but rather declares it null for a purely competence issue. The TC considers that Catalonia has exceeded the limits in the exercise of its powers, and therefore, art. 6 of the law, among others less relevant, must be declared unconstitutional.

However, it should be noted that the same TC does not close the door so that, in order to ensure the right to housing (art. 47 Spanish Constitution “CE”) and the social function of private property (art. 33.2 CE), the state legislator can approve a norm with the same content that in principle could be constitutional. In fact, that is the main debate undergoing in Madrid Parliament now.

What happens to contracts already signed? And with those signed from now on?

The effects of the sentence are, in any case, for the new rental contracts that are agreed from the publication in the Official Gazette (“BOE”) of said sentence: April 8, 2022.

This means that, in any case, the contracts signed in accordance with Law 11/2020 (which entered into force on September 21, 2020 with the publication in the DOGC) and until April 8, 2022 (publication in the BOE of the STC), continue to be governed by the law of limitation. Whereas the new contracts that are signed from that moment on can now freely set the rent of housing rentals. It is undoubtedly an issue that is going to generate tons of pieces of legal essays and litigation. It will be necessary to see what the Courts of First Instance and Second Instance of Catalonia decide first, and the Supreme Court afterwards. There are solid arguments for both views.

Tense housing market areas are still in force, but in practice, this does not limit rents in contracts between individuals.

We will discuss on other post what happens with the rental contracts signed before April 8, 2022 and that included the so-called “Berlin clause”, or a double rent: one while the limitation lasted, and another for when the rule was declared unconstitutional. That will also spill liters of ink and litigation.

In summary, the ruling of unconstitutionality implies that in the new rental contracts concluded in Catalonia, the price can be freely set by the parties. But on the other hand, nothing prevents the Cortes Generales in Madrid from passing a law with similar content at the time.

Our recommendation is that whether you are going to be a landlord or a tenant, consult us before signing the contract, since contrary to what you may think, rental contracts can be much more complex than they seem.

The case that we are analyzing today is common. The tenant stops paying the rent and, once he leaves the apartment, the damage and flaws in the apartment have a repair cost much higher than the deposit. In addition, when the time comes to file the tax returns, the owner have to pay taxes on rents that have not even been collected.

Is there a way to mitigate the tax burden? This is the essential question that we are going to answer below through binding Tax Ruling V0458-22, of March 10, 2022.

In principle, the income obtained from the rental, when they are unrelated to a professional activity (it is understood that they are the result of the professional activity when we have at least one person hired dedicated to the management of the properties), must be included as income from real estate (articles 22.1 and 27.2 Tax Act “LIRPF”). And the same happens if we withhold the deposit from the former tenant precisely to make the repairs.

However, the law itself provides (art. 23.1 to LIRPF) the deduction of expenses necessary to maintain the habitability of the home. For example, painting, replacing an element such as the elevator, heating, etc., always, of course, with the limit of what has been collected from the lease. The expenses incurred for the improvement and enlargement are not deductible for this concept (yes for the concept of amortization).

The problem is that these deductible expenses, while there is income and are being collected, can be deducted without any problem. But in our case study, the expenses are made once there is no rent, because the lease has ended, and we still have rents due from the last year.

What about these deductible expenses? At this point we must pay attention to two things.

First, we must say that the unpaid rents must be included in the taxable real estate income, taking into account that, if from the time any collection procedure has been carried out (for example, serving a call for payment via burofax) until the end of the tax period ( December 31) more than 3 months have passed, unpaid rent may not be included as income for tax purposes. Once they are collected they must be allocated to the tax period in which the collection is made effective. Therefore, it is advisable to serve a formal call for payment, even if only for tax purposes, and to avoid paying income tax for what has not been cashed.

Secondly, regarding repair expenses, if there has been real rental income in the same year in which the expenses have been made, they can be deducted from this income without any problem. But if the expenses are higher than the real income, this excess can be carried forward 4 years.

Nor should we forget that all repair and conservation expenses will be deductible as long as they are for the purpose of leasing the property, even when in the year in which they are made we are unable to obtain any rental income, in which case, as before , these expenses can be carried forward 4 years. But beware, because if the house is not rented, and the owner uses it for his personal use, he would lose the right to that deduction.

Finally, a piece of advice: any expense must have document evidence. Invoices and proof of payment, which must be by bank transfer if it is over €1,000 (VAT included), don’t forget. And, if possible, a contract or written instruction for the work, repair, etc., so that it is clear why the work was done and where. The burden of proof of any tax-deductible item is always on the taxpayer’s side.

Do you have doubts about the declaration of income derived from rentals? Has your tenant stopped paying and you don’t know how to recover all the money? We are at your disposal to advise you on all these issues and to collect the rent due with the best possible strategy.

Architecture is rooted to any real estate process. The real estate activities entail rigorous obligations in terms of money laundering (PBC).

The case study that we will analyse is that of an architect who, directly or through a professional company, is hired to carry out a project. We refer to the architect who was only hired to carry out the work project, what the Building Regulation Law (“LOE”) defines as the “project designer”. Specifically, the obligations under Law 10/2010, of April 28, on the Prevention of Money Laundering and the Financing of Terrorism (LPBCF) and its Regulations approved by Royal Decree 304/2014, of May 5^th.

The art. 2 of Law 10/2010 describes who must carry out a money laundering prevention control. In section 1, letter I, it clearly indicates that real estate developers, and those who carry out brokerage in the sale or lease of real estate, are obliged to control PBC. If the architect-designer is, simultaneously, the developer of the project (he himself draws up the project, builds and sells the building or the flats) then, yes, it will be obliged to carry out the due diligence provided for in the Law.

What if he just drafts and direct the Project? The LPBCF does not foresee anything regarding this situation and, therefore, making a literal interpretation, we must determine that the architect who only drafts the project of the works, will never be obliged to carry out a money laundering control. That is the same interpretation that the PBC whatchdog (“SEPBLAC”) has issued to us a query made by our office.

Do not hesitate to contact us to resolve any questions on this subject.

If in recent years you have tried to buy a property or rent it, or if you are doing so right now, you will surely have been asked for various very private documents, such as the tax income statement, pay slips and others, depending on the case, to comply with the Prevention of Money Laundering (PBC). Particularly, if you buy it from a developer or from a bank servicer, who have compliance departments dedicated to these matters. No one likes to air their financial privacy. That is why we have often been asked on it.

What are the documents that truly must be provided? Am I obliged to request certain documents if I want to rent or sell my house or flat? Surely these are questions that we have all asked ourselves.

In today’s article we will try to answer all these questions based on Law 10/2010, of April 28, on the prevention of money laundering and the financing of terrorism and its regulatory development of RD 304/2014.

Let’s begin with identifying those subjects that are bound by the law: art. 2 and specifically for the real estate case in Section l.

The only obliged in the real estate field are (1) real estate developers; (2) those who professionally carry out brokerage in sale of assets; or (3) those who professionally carry out leasing activities for rents higuer than €120,000 per year, or €10,000 per month.

Thus, as buyers of a property (whether we are a company or an individual) we will be obliged to provide certain documentation if we buy the property from an owner who is professionally dedicated to that, or if we acquire it through a real estate acting as an intermediary. The same thing will happen to us if we want to lease a property worth more than €10,000 per month as tenants from someone who is professionally dedicated to leasing.

However, we will not have to provide any documentation related to the PBC when we buy from a natural or legal person whose activity is not the sale of real estate (for example, a company that simply wants to sell a property that it owns), nor if we lease a property from a natural or legal person whose activity is not the leasing of real estate. But beware: if a real estate agency is involved in the purchase or lease operation (if it is greater than €10,000), as is usually happen with non-residents, it will be mandatory to comply with certain obligations.

If we are private sellers or lessors, we should not worry about anything related to the formal obligations to prevent money laundering.

What are the documents that can be required of me, or that must be required, to comply with the money laundering prevention law?

The truth is that neither the law, nor the regulations, clearly specify the level of diligence required, and it will depend a lot on the risk that the professional perceives, being able to establish different degrees of diligence in their entire judgment, role of the client and its internal procedures.

Strictly speaking, the only thing required by law is the identification of the client (art. 3 of the law, by ID, passport, or CIF card for companies), the identification of the nature of the professional activity of the client, the purpose of the operation (art. 5), and the monitoring of the business relationship, in order to ensure that there are no relevant changes in the client’s condition (art. 6).

Thus, neither the law nor the regulations at any time clearly indicate to us which documents are to be requested, and which are not, which in practice means that professionals end up requesting many more documents than are really necessary in order to have a solid defence file in case of the money laundering watchdog audits them.

Finally, we must not forget that art. 26 of the law requires having client admission policies in writing. And of course, comply with all privacy and data protection requirements.

Do you have doubts about money laundering? We are at your disposal.

Are we entitled to the exemption for reinvestment in habitual residence if we have been renting part of our home? A real estate investment is a long-term project. In the long term, personal situations can change radically. What was bought to rent can end up being the main residence, and vice versa. That can have fiscal consequences, and we are going to talk about that.

This issue has been analyzed by the Binding Consultation V1171-21, of April 29th, 2021 of the Spanish Income Tax General Sub-directorate. Before answering the question, let’s briefly explain what the exemption for reinvestment in habitual residence consists of.

The art. 38.1 LIRPF (Spanish Income Tax Law) allows not taxing the profit obtained after the sale of our home if we reinvest these profits in the acquisition of a new habitual home. Consequently, we will only pay tax for that part of the profit that exceeds the amount reinvested.

In order to benefit from this exemption, it is necessary to reinvest the profit, generally, within the two years prior or subsequent to the transfer of the previous habitual residence. When the reinvestment is not carried out in the same year as the sale, you must state the intention to reinvest in the tax return of the year in which the profit is obtained.

In order to invoke the exemption, the qualification as habitual of the home must concur in both dwellings: in which it is transmitted and in which it is acquired. The heart of the matter.

What is considered a habitual residence?

We can find the definition at the art. 41 bis RIRPF According to this article, your habitual residence is the building that constitutes your residence for a continuous period of at least three years. This continuous residence implies an effective and permanent use by the taxpayer himself, without taking into account temporary absences.
However, it will be presumed that the home has had the character of habitual when, even when the three years have not elapsed, the taxpayer dies or there is some extraordinary circumstance that forces it to change their address (marriage, separation, transfer labor, etc.).

Having this said and for the sole purpose of applying the exemptions of the art. 38 LIRPF (also those of the art. 33.4.b) LIRPF), the taxpayer must prove, either that the transferred dwelling constitutes their habitual residence at the time of the transfer (they have lived there the three years prior to the transfer), or that it has been considered a main residence until any day of the two years prior to the date of transmission (art. 41 bis.3 RIRPF).

Now that we know what the exemption for reinvestment in habitual residence is and we have defined the concept of “habitual residence”, we are going to analyse the object of the binding consultation.

The consultant owns a dwelling that has been operated as a touristic apartment from 2016 to September 2020. Since September 2020, he has begun to effectively reside in the apartment. He is considering to temporarily lease one of the rooms.

Two questions arise:

Is the consultant’s property considered a habitual residence?

En caso afirmativo, If so, could he benefit from the exemption of the art. 38.1 LIRPF if he has been renting a room?

In relation to the first question, in accordance with the concept of habitual residence of the art. 41 bis RIRPF, the Income Tax General Sub-directorate has understood that, in the case of selling the property, the consultant could not benefit from the exemption until three years have elapsed from the date of termination of the lease.

Regarding the second question, the Income Tax General Sub-directorate has understood that the consultant could only invoke the exemption on the profit that proportionally corresponds to the part of the house used privately (including common areas). That is, he could not apply the exemption on the part of the profit that proportionally corresponds to the rented room.But indeed for the rest, and this is the interesting point.

The first answer has not surprised us. he second really does, because it introduces an unexpected element of flexibility. It is definitely something to keep in mind.

A partir de ayer día 3 de junio de 2021, la certificación energética de edificios ha cambiado de manera radical.

La norma existente ha sido derogada, y se aplica el RD 390/2021 de 1 de junio.
Estas son las principales cosas a tener en cuenta por su relevancia práctica, al comprar, vender o alquilar una propiedad inmobiliaria a partir de ayer. En otras palabras: qué es lo que cambia.

1. Se debe disponer de certificado energético para casi todos los inmuebles

Ya no es cosa que afecte sólo a las viviendas.

Es más rápido decir cuándo no es necesaria (los más importantes supuestos):

a. edificios no residenciales < 500 m2 b. edificios protegidos c. construcciones provisionales d. edificios que se compran para demoler o para reforma integral En todos los demás casos, hay que tenerla. Una disposición transitoria concede un plazo de 12 meses (hasta junio 2021) para que la obtengan los inmuebles que vienen obligados de nuevo a tenerla. Esto es un gran cambio. 2. Se crea la “certificación técnica de proyecto” y la de “obra terminada”.

A nivel práctico, cuando se venda obra en construcción o sobre plano, o se alquile construcción futura, ya se debe tener un certificado de eficiencia energética “de proyecto” y adjuntarlo al documento de compraventa privada o de alquiler.

3. Será obligatoria la inclusión de la etiqueta en los anuncios de venta o alquiler.

La obligación alcanza también a las plataformas web.

En otras palabras: ya no es legal indicar “certificación energética en trámite”, que hemos visto miles de veces en los anuncios.

No cumplir con todo lo anterior será sancionable por dos posibles caminos: infracción de lo dispuesto en la Ley del Suelo y Rehabilitación Urbana y, además si se dan los casos, infracción del derecho de los consumidores.

Quite often the tenant agrees with the landlord that the first months of rent are not paid, in exchange for carrying out works on the rented property. It can happen with homes, but it happens much more often with commercial premises or offices. A lessor or assets (in this case real estate) is a taxpayer for VAT purposes (the VAT Law says so). And the commercial leases are subject and not exempt, at the rate of 21% (also according to the VAT Law). So we are going to analyze how this “swap” (rent in exchange for works) affects personal income tax and VAT, based on a very recent binding tax ruling (Consultation V0604-21), of March 16, 2021.

What happens at personal income tax level?

This relates to the situation where the landlord is a moral person. This consideration (rent for works) is considered income in kind for the landlord, who must consider it as income from real estate when filing his returns.

Regarding their temporary imputation (that is, in which fiscal year they must be declared), we must refer to article 14.1.a) LIRPF: “The income from work and capital will be attributed to the tax period in which they are due by the recipient”. Consequently, in this case the returns on real estate capital must be allocated at the end of the contract, that is, in the tax period in which they are delivered to the owner.

In the case raised, the object of the inquiry was the leasing of a commercial premises, however, there are no reasons to understand that the solution would not also apply in cases of housing or industrial leasing.

What about VAT?

For VAT purposes, the lease of commercial premises is an activity subject to and not exempt from tax and for which the lessor is considered an entrepreneur or professional.

In this case, the tax office understands that the months in which the lessee is obliged to pay the costs of the works and in which the lessor does not collect monetary rent are a “grace period”.

Likewise, it also understands that we are dealing with a “swap” contract in which, by definition, the consideration is paid in kind. From an economic and commercial point of view, swap contracts are identical to transactions in which the consideration is monetary.

Consequently, the lessor must pass on to the tenant the VAT corresponding to the grace period even if the tenant does not satisfy the agreed rent. What should be the tax base? We must go to article 79 of the VAT Act. For the case in question, the tax base would be constituted by the value that the lessor attributes to the services that he intends to obtain, and the lessee has agreed to perform. For this reason, the taxable base of VAT corresponds to the amount of the investment in renovation works that they have agreed to carry out on the premises. And be careful, this is an important point, since it can be higher or lower than the amount of the rent that is “swapped”.

Regarding when the VAT is due to pay, art. 75 LIVA establishes that in the provision of services, the tax will accrue “when the taxable operations are rendered, executed or carried out” and, in turn, the income will accrue at the time the part of the price included in each perception is payable.

In this case, the payment of this part of the lease will occur at the end of the contract, when the works made are handed over to the landlord, together with the keys.

Article 75.7 of VAT Acta establishes that, when the payment of the tax has not been agreed, or it has been established with a periodicity larger than one calendar year, the accrual of the tax occurs on December 31 of each year for the corresponding proportional part: have you ever seen anyone doing this calculation, this way, in such cases?

Only one thing is certain: almost no one is doing it well …

When buying or selling a property, the normal scenario (or the most recommended) is to do it by means of a public deed before a notary. Unlike the private contract, the sale by notarized deed allows the access of the transaction to the Property Registry, and almost totally protect us against third parties.

Among other various functions of the notary, there is to verify that the transaction obeys the Law 10/2010, of Abril 28, prevention of money laundering and terrorism financing. Therefore, the deed must contain the sale payment method and, if any, the proof of all payments.

The most common payment methods in property transactions are the nominative cheque and the bank transfer. And, what happen with the cash payment or the bearer cheques?

Since the end of 2012, when the Law 7/2012 of October 29 was passed, it is prohibited to pay in cash more than 2,500 euros (or its equivalent in foreign currency) in those transactions in which one of the parties is an entrepreneur or a freelance professional. This limit amounts to 15,000 euros when the payer is a natural person acting as such, and who does not have its tax address in Spain.

The breach of this limit constitutes a grave administrative infraction and the penalty shall be 25 % of the amount paid in cash.

What do we mean by cash?

According to the article 34.2 of the Law 10/2012, the cash payment methods are:
– Paper money and coins, domestic or foreign.
– Bearer cheques denominated in any currency.

Any other instrument, including the electronic ones, designed to be used as a bearer payment means.

What is the difference between nominative cheques and bearer cheques?

The main difference between this payment methods is that, while the nominative cheque contains the person who can cash it, the bearer cheque does not contain the person to whom it is addressed to. Consequently, anyone who holds a bearer cheque can cash it. Thus, like paper money and coins, bearer cheques are easily transferable between people.

On October 13th, 2020, the Spanish Government published a new bill against tax fraud, which includes, among other measures, a tightening of the limit on cash payments between entrepreneurs, lowering the limit from 2,500 to 1,000 euros, while maintaining the limit of 2,500 euros for payments made by individuals.

Will this be the end of cash? We do not have the answer to this question, but we cannot deny this method of payment is being relegated.

Is the limit of 2,500 euros for payments in bearer cheques legal?

The recent Sentence 76/2021, of February 25th, of the Administrative Court No. 3 of Valencia has admit an administrative appeal against a sanction for a violation of the 2,500 euros limit for bearer cheque payment.

In this case, there was a series of real estate transactions for a total amount of 3.3 million euros paid by bank cheques, one of them being a bearer cheque of 200,000 euros which was sanctioned by the Regional Inspection of the tax office in Valencia.
Based on the Opinion of the European Central Bank of 1 February 2019 on limitations to cash payments, the appellant alleged that the sanctioning regime is excessive and the fines disproportionate, and it reiterates that the limitations on cash payments should not go beyond what is necessary to achieve its goals.

By this groundbreaking sentence, the judge agrees with the claimant mainly on the basis of the EU Court of Justice judgment of 26 January 2021, cases C-422/19 and C-423/19, in which the EU Court conduct a survey of the concepts of ‘legal tender’ and ‘monetary policy’ of banknotes and coins.

Regarding the first, it points out that the concept of ‘legal tender’ of a means of payment in a currency unit signifies that it cannot generally be refused in settlement of a debt denominated in the same currency unit, at its full face value, with the effect of discharging the debt (principle of acceptance of cash payments and discharging from payment obligations).

Regarding the second, it establishes that the main objective of the monetary policy is the maintenance of the price stability and, although it is an exclusive competence of the Union legislator, this does not prevent the Member States, within the framework of their own competences, to adopt certain measures to regulate the extinction of the pecuniary obligations.

In this sense, the EU Court indicates that the States may regulate the cash payments as long as (1) the principle of cash acceptance is not affected; (2) there is a reason of public interest such as the prosecution of tax fraud; and (3) the measures must be proportional, that is, the measures concerned must be appropriate for attaining the legitimate objectives pursued and do not go beyond what is necessary in order to achieve those objectives.
In the light of the foregoing, the Sentence of the Valencian Administrative Court concludes that the limitation of the cash payment of 2,500 euros when one of the parties is an entrepreneur or professional extends to almost all the operations that occur nowadays, being exceptional the transaction in which both parties act as individuals.

In addition, it states that this measure is not necessary to guarantee the fight against tax fraud in payments by bearer cheques, since there are other more effective means to achieve this objective. In particular, the Spanish regulation on the prevention of money laundering and terrorist financing already obliges banking entities to identify all the people who intervene in operations before them exceeding 1,000 euros and to keep the documentation for ten years.
Therefore, the provisions of the TFEU, and its interpretation by the CJEU, displace the internal rule, which could not be applied in the factual situation.

In short, limiting the amount of a bearer cheque is an unnecessary and disproportionate measure for the purposes of controlling tax fraud and it is contrary to the general principle of acceptance of the euro as currency in legal tender.
For the moment this is the only sentence and it is from an administrative court (not from the Supreme Court), but it applies the EU law and it is backed up by solid CJEU case law, so it should be taken into account in the elaboration of the new bill against tax fraud.

We have come across a funny verdict about lease contracts, which we’ll mention bellow. This serves as a motive to tackle an issue that happens often, that is controversial, and that even in some cases even generates litigation.

Should we return fresh painted the shop or home once the lease is over?

Although it is true that when we rent premises or house we can paint it as we wish (painting is not considered a work), what we ask ourselves today is whether, at the end of the contract, the tenant must return the premises or house freshly painted. All this, of course, assuming that nothing has been established in this regard in the lease contract, in which case we should be as provided there.

As a general rule, the tenant should not paint the walls at the end of the contract.

This is, however, not exempt of controversy and not even the courts have a common approach. According to the majority jurisprudence and common sense (at least ours), it will not be necessary for the tenant to return the newly painted house or premises if he has painted it the same color or very similar to the one that already existed. We obtain the same answer if at the end of the lease, the state of the painting is optimal and similar to the one the tenant found upon entering. Unless proven otherwise, it is presumed that the tenant received the property in good condition (art. 1262 of the Civil Code).

Regarding the latter, it must be borne in mind that, if the premises or house has been leased for a long time, painting will be considered a maintenance expense and we can hardly believe that the painting has remained intact and unrelated to the passage of time , so the tenant should return it painted under article 1561 of the Civil Code.

Attention, the tenant must return the house or premises painted if the color he chose does not meet the criteria of “normality”

The Judgment of the Provincial Court of Cádiz 157/2020, of November 5, ruled on an situation where the tenant was an Association that painted the walls and facade of the premises (including the sofa) the green color of the Brazilian flag.

Having agreed in the contract that the lessee received the premises and the equipment in good use, which should be extended to the painting of the premises, the Court has considered that said carioca green color represents an important change in the appearance of the premises and that In addition, it exceeds the criterion of normality.

What do we understand by the criterion of “normality”?

The court understands that a change in the appearance of a leased premises meets the criterion of “normality” when that change involves an adaptation of the premises to the tastes of the tenant and that, after the termination of the contract, it will allow the use of the premises by the lessor in such conditions. In this sense, the court considers that it is not frequent or usual to paint the walls and facades of said green color, so the tenant must assume the cost of replacing the painting of the premises to its original state. But allowed the tenant to deduct from said cost the depreciation of the painting (set by the court at 30%), that is, assuming that the premises were not delivered freshly painted the day the lease started.