Your Guide to Rent-to-buy Contracts in Spain

What if you’ve already decided to move to Spain, but haven’t made the decision on where to settle or what type of property you want to buy? What if you also know that you don’t want to rent a property under the terms of a normal contract? If your answer is yes to both these, a rental contract with an option to buy may be a good fit for you.

This is a unique contract that suits both you as a tenant and potential buyer and the owner of the property. However, like all aspects of property law, rent-to-buy contracts in Spain have unique characteristics and you need to understand these before you sign one. To help you get to the bottom of a rental contract with an option to buy, read our guide.

Did you know? This type of contract is known as a contrato con opción de compra in Spanish.

What Is a Rent-To-Buy Contract in Spain

What Is a Rent-To-Buy Contract in Spain?

The easiest way to explain this type of contract is that it is a hybrid between a regular rental contract and a purchase contract. Most of the contract includes information about the rental with clauses on the rental rate, duration of the lease, conditions for its extension and cancellation plus what the tenant is (and isn’t) permitted to do.

However, rent-to-buy contracts in Spain also include a specific clause on possibility to purchase. The clause generally states the agreed conditions for the final purchase price, which can be:

  • Established when the contract is signed and therefore not subject to change.
  • Open and therefore subject to later agreement between you and the owner.
  • Pre-described, for example, the market price when you decide to exercise your right to buy.

This clause also states the timeframe you have to buy.

What Are the Legal Requirements for This Type of Contract

What Are the Legal Requirements for This Type of Contract?

There is no specific legal regulation for rent-to-buy contracts in Spain. The only condition is that the Urban Lease Act be observed and that the contract contains the obligatory requirements of home rentals included in the Law. Everything else is for the parties to freely agree.

Did you know? Buying a property in Spain involves a process that is probably very different to the one that operates in your home country. Find out more about conveyancing in Spain

Rental payments

What About Rental Payments?

One of the big advantages of rent-to-buy contracts in Spain is that generally rental rates paid in advance are discounted from final purchase price. Your rental payments are part of the final price. However, be aware that the opposite can also be agreed.

Are Rental Rates Higher in This Type of Contract

Are Rental Rates Higher in This Type of Contract?

Not necessarily and they tend to be the same as usual market prices. Both parties benefit from this type of contract – you as the tenant have the option to buy and the owner has a potential buyer.

The only extra payment may be the premium for the right to buy (see below) if the contract includes this clause.

Who Pays Taxes and Community Fees in a Rental Contract With the Option to Buy

Who Pays Taxes and Community Fees in a Rental Contract With the Option to Buy?

The owner pays them unless you have otherwise agreed in the contract.

When do I Have to Buy?

A rent-to-buy contract always starts the date by which you must exercise your right to buy the property. And as with all the conditions, both parties also agree this clause.

What Happens If I Decide Not to Buy?

Some contacts include a premium as the price you pay for having the right to purchase. This clause is generally drafted so the premium is discounted from the final price of the property if you decide to go ahead with the purchase. If you decide not to buy, you generally lose the premium.

But again, this clause is not obligatory and not all contracts contain it. Its inclusion has no effect on the legality of the contract.

Did you know? Buying a property in Spain in the Covid era comes with particular challenges. Find out what they are.

How Do I Exercise My Right to Buy?

A written formal communication from tenant to landlord at the time established in the contract will be enough for the purchase contract to be exercised. Once this has happened, you obviously need to go to the Notary to sign the title deeds and pay any outstanding amount for the property price.

What If I cannot Buy When the Deadline Arrives - Can I Extend the Contract

What If I cannot Buy When the Deadline Arrives? Can I Extend the Contract?

Yes, as long as both parties agree to an extension. It’s also possible that the landlord (owner of the property) may remove your right to purchase and only agree to you extending the tenancy. If there is a premium, you may lose it.

Did you know? A good contract represents your interests to the highest possible degree. Never sign a rent-to-buy contract in Spain without taking independent legal advice.

Maria Luisa Castro

Director and Founder
María founded CostaLuz Lawyers in 2006 and is the Firm’s Director. María is registered Lawyer number 2745 of the Cadiz Bar Association and is licensed to practice in all areas of law throughout Spain. Working closely with her team, María has developed the firm into one of the most highly regarded and trusted Spanish Law Firms acting for English-speaking clients with legal problems in Spain. We’re here to help. Contact us today for a free no-obligation consultation.
 

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