What is a rent-free period (“carencia de renta”) for works on commercial premises?
It is a period, normally of one to six months, during which the tenant pays no rent, or pays less, to make up for the works the tenant carries out to adapt the premises to his or her business. It is not in the law but is agreed in the lease. That is why the lease should state how long it lasts, which works it covers, whether it includes expenses and what happens if the tenant leaves early. The statutory deposit (“fianza”) must be paid on signing, even if there is a rent-free period.
Alburquerque Abogados
José Manuel AlburquerqueWhat should be agreed
- How long the rent-free period lasts and whether it covers only the rent or also the service charges (owners' association fees), the “IBI” (the local property tax) and the other expenses.
- The works, with their plans, the time allowed for carrying them out and who applies for and pays for the licences. Works that change the layout of the premises, such as knocking down partition walls, require the landlord's written consent. Works that reduce their stability or safety cannot be carried out.
- What happens if the tenant leaves before a minimum period. It is common to agree that the tenant will pay back the rent that was not paid. If this is not agreed, in principle the landlord cannot claim it.
- What happens to the works when the lease ends, whether they remain for the landlord without anything being paid for them or whether the tenant has to return the premises in the condition in which they were received.
If nothing is agreed about the works
If the lease says nothing, the tenant is not entitled to be paid by the landlord for the improvements he or she made. The tenant can take them away if they can be removed without damaging the premises. Anything that cannot be removed stays with the landlord.
What the rent-free period does not solve
- If the business cannot obtain its licence because of a problem with the premises themselves, the rent-free period does not fix that. It is advisable to agree what happens in that case, for example that the tenant can terminate the lease.
- The statutory deposit, of two months of the agreed rent, is compulsory on signing the lease, even if no rent is paid during the rent-free period. It is advisable to do the same with the other guarantees, such as a bank guarantee.
This answer is provided for educational purposes and offers initial guidance on the question raised. Every matter has its own circumstances and nuances that require individual assessment. For that reason, before taking decisions with significant consequences, it is advisable to consult a professional and not to rely solely on this information. Personalised advice makes it possible to apply these explanations to the specific case and to assess the options available with greater certainty.