Spain: Lease Of Business Premises Prior To The Entry Into Force Of The L.A.U. Of 1994. Eviction On Expiry Date?

Business lease agreements signed before the entry into force of the Urban Leasing Act (L.A.U.) of 1994, have become less frequent but have not been extinguished over the course of time.

This is the case for lease agreements which have been signed by a natural person as a lessee (tenant) prior to May 9, 1985, at which time the contract was subject to the non-waivable and compulsory extension regulated in the L.A.U. of 1964.

This has been reiterated recently by the First Chamber of the Supreme Court in its Judgment of January 17, 2019, interpreting the Third Transitory Provision of the L.A.U. 1994 as imposing the law to the effect that a lessee (tenant) on the date of entry into force of this Act continues to be so, with the right to a lease extension, in the terms established by the previous law to which he or she was subject to (LAU, 1964), until his retirement or his death.

In the case analysed in this judgment, the Provincial Court of Badajoz resolved the lease agreement on the expiry date issue under the terms of a legal framework which was different from the jurisprudence established by the Supreme Court which allowed it to recognize the Appeal of Cassation filed by the lessee against said Judgment.

The Supreme Court, maintaining its jurisprudential criterion, states in its Second Point of Law that: "... Lease contracts for use other than housing agreements made prior to May 9, 1985 -as is this case- will subsist at the will of the lessee, subject to extension, at least until his retirement or death occurs. The lessee (tenant) for all purposes was the defendant today at the time of entry into force of the new law and, consequently, the transitional rule applies to him and not to the initial tenant, since this rule exclusively covers subsequent subrogation upon the entry into force of the new law, dispensing with those that may have been produced prior to said time according to the legislation then in force. In this way, the lease can be extended throughout the life of the tenant, and if applicable, to the spouse who is subrogated, or a maximum of twenty years after the entry into force of the L.A.U. 1994 if the subrogation occurs in favour of a descendant ".

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