• Information on arbitration regarding urban leasing
• Comparison of Ordinary Justice vs. AEADE
• Arbitration Proceedings. Timelines and Costs
• Documents (leasing contract, arbitration agreement)
  

One of the main causes that accounts for the fact that, currently, only 14.88% of homes in Spain are being leased and there is a total of approximately 2,900,000 empty homes, is the lack of legal certainty in two aspects: the high cost and the slow pace of the resolution of disputes related to leasing contracts.

In cases of urban home leasing contracts, or those for uses other than housing, it is a well-known fact that the legal proceedings for eviction are difficult and expensive should the tenant fail to comply with the terms and conditions of the contract and cease the payment of the monthly rent due.

In arbitration proceedings regarding unpaid rent, the arbitrator uses the award (ruling) to terminate the contract, agree to evict the tenant (which leads to the owner regaining their property) and rules that the tenant pay all rent owed up to the date on which the rented property returns to the hands of the owner, in an average period of 4-5 months.

Naturally, tenants can also make use of AEADE’s arbitration proceedings, with the same timelines and costs, to exercise their rights should the owner fail to comply with the contract, and enjoying all legal guarantees.


Comparison of timelines and costs: Ordinary Justice vs. AEADE Arbitration
 

(1) The times and costs of the legal proceedings depend on the type of proceedings and on the Court hearing the case.

(2) Uniformity in times and costs whatever the type of non-compliance


Arbitration Proceedings. Timelines and Cost

1º.- TIME.- With AEADE arbitration proceedings the award is obtained in 20 – 30 days, compared to court proceedings, which take an average of 8 or 9 months. If the award is not complied with in the voluntary term, the successful party can then legally enforce it. AEADE has ample experience in this type or arbitration, and it is proven that there are significant savings both in time and costs compared with court proceedings.

2º.- COSTS.- It is not necessary to attend the private arbitration with a lawyer and attorney. If the owner or tenant wishes to present an arbitration claim, AEADE will provide an application form to this effect.
With regard to the arbitration costs, the applicable costs for those who issue the claim are detailed in the table below:

Claim amount                                  Cost of proceedings
 
(annual rent)                                       

up to €3.000                                      €235

from € 3.000,01 to €5.000                   €335

from €5.000,01 to €12.000                  €425
 
from €12.000,01 to €24.000                €500

from €24.000,01 to €35.000                €615

from €35.000,01 to €54.000                €750

from €54.000,01 to €65.000                €900

from €65.000                                     €1.150
 

In all cases, the expenses and costs paid in advance by the claimant will be reimbursed once the proceedings have concluded, provided they are declared successful in their claim, and the amounts are obtained from the party at fault.


Necessary documents

When formalising a lease, two documents are needed: the leasing contract and an arbitration agreement which should be signed as an annex to the leasing contract.

Leasing contract

The leasing contract is a contract where the lessor grants the use and enjoyment of a property for a defined period in exchange for rent, subject to rights and obligations both for the lessor and the lessee. These rights and obligations are included in the contract, as well as in the Law of Urban Leasing.

IMPORTANT: IT IS ESSENTIAL TO VOID THE CONTRACT CLAUSE OF SUBMISSION TO COURT JURISDICTION.

AEADE recommends including in the leasing contract several addresses for notifications, for instance the addresses of family, work, guarantor, etc...

For information and guidance purposes only, AEADE provides three leasing contract models (home, premises and short lets). In any case, if you wish to include different clauses, we advise you to resort to experts who can draft the leasing contract taking into account all your needs, whether you are a lessor or a lessee.

Arbitration agreement annexed to the leasing contract

In order for the parties to have right to the terms and costs mentioned earlier, it is essential for the owner and tenant to include the original arbitration agreement designed by AEADE as an annex to each of the leasing contracts.

The arbitration agreement commits AEADE and its arbitrators to dictate the award in a maximum term of two months from the acceptance of the arbitrator of the arbitration proceedings.
 
In practice, the arbitration institution has reduced the average term for issuing an award to an average of 25 days from the acceptance of the arbitrator.
 
The arbitration agreement is within an envelope  that contains the following documents:

• Information Note; this note will inform you about AEADE and its arbitration.
• AEADE Arbitration Agreement, a document annexed to the main contract
• 2 arbitration forms, one for the owner and one for the tenant