What is the Rustic Lease Law?
According to Art. 1 of the Rustic Leases Law (LAR), it is stated that rustic leases are considered to be all those contacts through which one or more farms, or part of them, are temporarily granted or permitted with the purpose of agricultural, livestock or forestry use in exchange for a certain price or rent.
Law 49/2003, of November 26, on Rustic Leases, which has been modified by Law 26/2005, of November 30, specifies in its first article the definition of "Rustic Lease", mentioned in the previous month, definition and type of lease that differs in relation to urban rentals, that is, those that are fundamentally for homes and business premises.
According to the provisions of the aforementioned and stipulated in the Law, a Rustic Lease is not considered when it is not considered a rustic property, nor its purpose is destined for agriculture, livestock or forestry, or in its effect, there is no contract of rent. In these cases it is not possible to speak of the existence of a rustic lease.
What are the laws that regulate Rustic Leases?
Generally, rustic leasing laws are established by what is agreed between the parties involved, as long as they do not go against the Law, it also involves the case to which the issue of duration, assignment and sublease refers, among other points that have to do with the rustic leasing process.
Up to now, five (5) regulations that are applicable in the leases dealt with in this article are still taken into account, which include:
- According to Art. 1546 of the Rustic Leasing Law (LAR), of the Spanish Civil Code, it applies to all those involved in the leasing process, that is, it defines the landlord who is obliged to give up the use of the thing, to carry out the work or provide the service and defines the lessee as the one who acquires the use of the thing or the right to the work or service that is obliged to pay. Thus, this regulation applies to all rustic leases to which the special laws on rustic leases cannot be applied.
- The referred Rustic Leases Law of 1980, Law 83/1980 of December 31, which applies to all those contracts that are entered into before 2004.
- The Reform of the Law of 1980, which is operated by the Law of Modernization of Agricultural Operations of 1995, Law 19/1995, of July 4, which applies to contracts entered into between July 1995 and May 2004.
- The Rustic Leases Law of 2003, Law 49/2003 of November 26, which applies to contracts entered into between May 2004 and January 2006.
- The reform of this Law operated by the Law of 26/2005, of November 30, which applies to contracts entered into as of January 2006.
- The reform of Art. 13.2 of Law 272015 of March 30 on deindexation of the Spanish economy that applies to contracts entered into as of April 1, 2015.
However, all the regulations mentioned above coincide in the same settlement and, is that: All leases in force at the time of entry into force of each Law will be governed by the regulations applicable at the time of their execution. Therefore, it is important to know the year in which the lease began, since depending on that year in which the respective contract is formalized or initiated, one or another law will apply. In the case, for example, of a lease that started in 1998, then the 1980 law will be applied with the 1995 reform.
It is for this reason, that in the first instance the lease must be read carefully, and carefully verify the date it was signed and the clause that is reflected in the term of the duration.
In the case, in which verbal agreements have been established, the dates on which the referring agreement began should be available and try to prove it by any means that is admissible in law, through documents, witnesses or others. For these cases in particular, they serve bank transfers or receipts that have been made by hand as a form of payment. (It should be noted that generally, they are carried out on an expired year, that is, the start date will probably be taken at the beginning of the agricultural year, specifically in the month of October of the year prior to the one shown on said receipts.
Another way to prove the established rustic leases is through the Common Agricultural Policy (CAP) requests, remembering that if the declaration regarding the request for these grants is made in February or March of the corresponding campaign in progress, then the lease it would start in October of the previous year. In these cases, you can request a document that certifies said agreement, this can be done in the Ministry of Agriculture where it certifies since what year these help have been requested for the leased lands.
What is the stipulated term for the duration of a Rustic Lease contract?
One of the most important situations to consider is the duration of the "Rustic Lease Agreement". This consideration is indicated after the reform established by the Law, that is, a duration of five (5) years, in addition, that the entire clause of the contract that indicates a shorter duration will be null.
In relation to rent, it is specified that the rustic leasing law specifically states that the amount will be freely agreed between the parties involved and the form of remuneration will be made in money, but leaving open the possibility that a remuneration can be set in kind, provided that its conversion into money can be carried out.
After the aforementioned modification, the parties may establish the review system they deem appropriate. In the event that the parties do not reach an agreement or cannot agree on the review of the rent of the contract, the respective Law of Rustic Leases in Art. 13, specifies that "In the absence of an express agreement, no income review will be applied."
On the other hand, it is also specified that in the event that there is an express agreement between the parties on a certain mechanism for reviewing monetary values where the index or the reference methodology is not detailed, the income will be updated annually by reference to the annual variation of Competitiveness Guarantee Index.
Also, it is important to take into account the realization of the works that are carried out on the leased properties, in which the owner is in charge of making the repairs that are necessary to maintain the conservation of the property that is leased and that thus can serve in a correct way for the use or exploitation to which it was destined when the initial contract was concluded, without giving the landlord the right to increase the rent for said works carried out.
What happens if the owner of the Rustic Lease does not carry out the necessary works on the farm?
In the event that the owner or landlord does not carry out the necessary works on the farm, then the tenant can:
- Make a judicial request to carry out the repairs it deems necessary.
- Resolve the contract.
- Make a request for the reduction that is proportional to the rental price.
- Carry out the relevant works by the same tenant and request the respective reimbursement, through compensation with subsequent rents as they expire, if it is considered that the tenant wants to assume the origin of the cost of the works to be carried out.
All these situations explained at this point are the considerations that must be taken into account when formalizing a rustic lease.
What types of leases are exempted from the Rustic Leases Law?
- All those seasonal contracts that are less than the agricultural year.
- All leases of tilled and prepared land on behalf of the lessee arranged for sowing or for planting that is specified in the respective contract.
- Those whose purpose is farms that are acquired for any cause of public utility or social interest, under the terms provided by the applicable special legislation.
- All contracts whose main function is.
- The use of stubble, secondary pastures, broken meadows, montaneras and everything related to secondary use.
- The uses that are aimed at seedling or improving fallows.
- The hunt.
- All industrial, local livestock farms or land that are exclusively dedicated to raising livestock, stables or enclosures.
- Any activity that is different from agriculture, livestock or forestry.
- Also excepted are those contracts that affect communal assets, assets that belong to local corporations and neighboring mountains in common hands, which must be governed by their specific regulations.
There are a series of circumstances in which the non-application of the Rustic Leases Law is promoted, among these are: rents that are already included in the scope of the current urban leases law.
