Which law applies to renting an industrial unit or a warehouse?

Question

José Manuel Alburquerque · Accepted Answer

The “Ley de Arrendamientos Urbanos” (LAU), Spain's urban tenancies act, because an industrial unit or a warehouse is a building and it is let under a commercial lease (“uso distinto del de vivienda”). But that act leaves almost everything in the hands of the parties. First comes what the contract says, then the act's rules for these lettings and, for anything not covered, the Spanish Civil Code (“Código civil”). One of the few rules that cannot be changed is the statutory deposit (the “fianza”) of two months' rent, which in Catalonia must be lodged with the “INCASÒL”, the Catalan public body that holds tenancy deposits. What the law says if the contract says nothing There is no minimum term and there are no mandatory extensions. If no duration was agreed, the contract is deemed to be made for the period for which the rent is paid, usually by the month. If, when it ends, the tenant stays on in the unit for fifteen days without the landlord objecting or having given notice beforehand, the contract is renewed for that period. If a business activity is carried on in the unit, the tenant can sublet it or assign the lease without the landlord's permission, but must notify the landlord within the following month by a means that leaves a record, such as a “burofax”, a certified letter with proof of content. The landlord can then raise the rent by 10 % if part of the unit is sublet and by 20 % if the whole unit is sublet or the lease is assigned. Repairs needed to keep the unit in good repair are the landlord's responsibility. Minor ones, due to wear and tear from everyday use, are the tenant's. The tenant cannot carry out works that alter the configuration of the unit without written permission. If the landlord sells the unit, the tenant has the right to buy it before anyone else at the same price. When the contract ends, the tenant can only ask for goodwill compensation if there has been a commercial activity of selling to the public in the unit during the last five years. An industrial or logistics unit with no sales to the public does not give rise to it. Almost all of this can be changed in the contract and that is what usually happens. That is why it should be read carefully before signing. When that act does not apply If the unit is let together with the business as a going concern, with its machinery, its permits and its customers, it is a lease of a going concern (“arrendamiento de industria”). It is governed by what was agreed and by the Civil Code. If undeveloped land is let, such as an open yard for outdoor storage or for parking, there is no building and the Civil Code applies. In practice Industrial units are usually let for long terms, with a minimum commitment period and agreed extensions. The guarantees, who pays for the fitting-out works and the condition in which the unit must be returned are also usually agreed. Even if the landlord is a private individual, the letting carries VAT at the standard rate of 21 % on the rent. If the tenant is a business or a self-employed person, the tenant must withhold 19 % of the rent as an advance payment of the landlord's tax.