Real estate rental dictionary

Built Area

The built area is the total measurement of a property’s surface measured from its exterior perimeter. It therefore includes all internal obstacles such as walls, pillars, stairs, etc. The built area is often used to calculate a property’s value and to determine compliance with building and urban planning regulations. It is usually expressed by indicating separately the surface area corresponding to the common elements of the property such as corridors, stairs, or gardens.

Cadastral Reference

Cadastral Reference is the identification code assigned to each property registered in the Cadastre, the public registry of real estate property in Spain. The cadastral reference allows precise identification of a property’s location and characteristics.

Comprehensive Rental Management

Comprehensive rental management is the service offered by a real estate agency or property administrator that handles all tasks related to property rental. These include property promotion and tenant search, contract and inventory preparation, collection and payment management, and property maintenance, among others.

Delinquent

Delinquent refers to a person or entity that fails to meet their payment obligations within the agreed timeframe. In the rental context, a delinquent tenant is one who does not pay rent on the agreed date.

Delinquent Tenants File

A delinquent tenants file is a database containing information about people or companies that have incurred payment defaults. This list is used by property owners, real estate agencies, and insurers to evaluate potential tenants’ financial solvency before signing a rental contract. It’s important to note that inclusion in a delinquent file must be done according to current regulations. Similarly, consulting these files usually requires prior written consent from the tenant in question and involves a consultation fee. The main delinquent files used in Spain are: ASNEF-Equifax, Badexcug-Experian, RAI, CIRBE, icired, and RIJ. And those focused on covering rental defaults are: FIM (Alquiler Seguro) and bdmi (Idealista).

Energy Performance Certificate (EPC)

The Energy Performance Certificate (EPC) is the document that certifies a property’s energy efficiency level. The EPC assigns a rating from letter A (most efficient) to letter G (least efficient) for both CO2 emissions and consumption. It is mandatory in Spain for property sales or rentals. It is valid for 10 years.

Eviction

Eviction is the legal process through which the landlord claims possession of the property from the tenant who has breached the rental contract conditions. Eviction is usually claimed when the tenant doesn’t pay rent, performs unauthorized works, causes disturbance to neighbors, or breaches any other clause of the contract or the Urban Rental Law.

Grace Period

The grace period is the time during which payment of an economic obligation is postponed, in the case of rental, the payment of rent. The grace period can be total or partial. It can be agreed upon by the parties as a flexibility measure due to financial difficulty or as compensation for certain commitments by the tenant (works, property adaptation, etc.).

Gross Yield

Gross yield is the quotient between the sum of rental income accrued in one year divided by the current value of said property.

Home Insurance

Home insurance is a type of insurance that covers damage and losses that a property may suffer, as well as the goods inside it and damage caused to third parties originating from the insured property.

Home Staging

Home Staging is the real estate marketing technique that consists of preparing the property for sale or rental, with the aim of improving its appearance and attracting a greater number of interested parties with minimal investment possible. This technique includes painting, decoration and dressing of the property, its lighting, cleaning, smell, and removal of personal elements among other strategies.

IDUFIR

IDUFIR is the Unique Property Registration Identifier. It is a code that unequivocally identifies a property in the Property Registry. It emerged in 2008 as an alternative to the previous classification method, composed of Volume, Book, Page, Registration, and Date, providing more security and guarantees. From 2016 it evolved to CRU (Unique Registry Code). Both are composed of 14 digits and can be found at the top of the property’s Simple Note. It should be noted that, due to the recent appearance of both codes, not all properties have IDUFIR or CRU. Only those registered after these dates or that have had any registry inscription since then.

INE

INE (National Statistics Institute) is a state public entity responsible for collecting and disseminating statistical information about society, economy, and environment. Among economic and consumption data, INE publishes the CPI monthly with different scopes and methodologies.

Insurance for Non-payment or Rentals

Insurance for non-payment or rentals is a type of insurance designed to protect owners of homes, rooms, or premises from risks derived from a lease, especially rent non-payment. If the tenant fails to pay the agreed rent, the non-payment insurance assumes payment of unpaid rents up to a maximum number of monthly payments. It usually also covers extrajudicial, expert, and judicial costs derived from any litigation with the tenant, as well as a series of damages caused by them, mainly vandalism, lock change, cleaning, and/or utility non-payment.

Inventory

The inventory is a detailed list of goods and objects contained in the property, as well as a description of its general condition. It is made to establish the conditions in which the property is found at the beginning and end of the lease. Its function is to avoid conflicts when determining responsibility for possible damages.

Landlord

The landlord is the person or entity that possesses the right to use a property that they transfer to another person (the tenant) in exchange for rent, under terms set forth in a contract.

Law for the Right to Housing

The Law for the Right to Housing was approved on May 22, 2023. Its main objective is to facilitate access to housing, especially under rental regime. For this, it includes measures such as limiting rental prices in “stressed zones,” setting new indices for updating ongoing leases, establishes additional conditions for evictions, prohibits charging fees to tenants, and reviews tax benefits for owners, as well as establishes IBI penalties for empty properties. It modifies several articles of the Urban Rental Law, Civil Procedure Law, and Land Law among others.

Lease with Option to Buy

Lease with option to buy is the hybrid rental and sale contract in which it is agreed that at the end of the rental contract, the tenant may exercise their option to buy the property at a pre-agreed price, discounting all or part of the rental payments. If this right is not exercised, the tenant will lose the premium that is usually requested at the beginning of the contract.

Net Yield

Net yield is the quotient between the sum of rental income accrued in one year minus all expenses associated with said property divided by the current value of said property. Among property expenses should be considered: defaults, insurance, community expenses, taxes, and fees.

Old Rent Lease

Old rent lease refers to those rental contracts that were signed before the entry into force of the Urban Rental Law of 1985 in Spain. These contracts usually have conditions normally more favorable for the tenant, such as, for example, a lower rental price and indefinite duration. Despite the entry into force of the new law, old rent rental contracts have remained in force, as long as tenants have remained in the housing or have managed to subrogate the lease.

Payment Default

Payment default is the situation where the tenant does not comply with rent payment on the date agreed in the rental contract. Default can lead to initiating an eviction process and, ultimately, achieving the termination of the rental contract.

Pre-emptive Right

Pre-emptive right is a privilege that allows a person or entity to buy a good or property before other interested parties. In real estate, it can occur when a tenant has the option to buy the rented property or when a community of owners has preference in buying a property in their building. In summary, this right protects the interests of certain individuals or entities in real estate transactions.

Property

The term “property” refers to any type of real estate property, which can be rural or urban in nature and of various types such as homes, commercial premises, offices, parking spaces, storage rooms, and land, among others.

Property Appreciation

Property appreciation refers to the increase in value of a property over time. In the context of real estate investment, a property can experience appreciation due to factors such as general market evolution of sale or rental prices, changes in demand and supply in that area, improvements in nearby infrastructure or equipment, among others.

Property Registry

The Property Registry is a public institution responsible for registering and publishing rights over real estate properties, such as properties or land. Its function is to guarantee legal security in real estate transactions and protect people’s property rights. All real estate properties are registered in this registry, as well as mortgages and other real rights that may fall on them. The information found in the Property Registry is public, and anyone can request a simple registry note to know the current legal situation of a real estate property.

Property Registry Simple Note

The property registry simple note is a document obtained from the Property Registry that contains information about a specific real estate property or land. This information can include the identification of the property, its description, ownership, and charges and encumbrances that weigh on it, among other relevant data. The simple registry note is a very useful document to know the legal and registry situation of a property before carrying out any real estate operation, such as buying or renting it.

Rent

Rent is the amount of money that the tenant pays to the landlord for the use and enjoyment of the property. The rent is established in the rental contract and is usually paid monthly.

Rental Contract

The rental contract is the legally valid document in which the parties agree to the conditions of the lease of a property. The rental contract determines the rented object, the rent price, the duration of the rental, termination terms and form, the obligations of the parties, and the guarantees provided.

Rental CPI

The CPI (Consumer Price Index) is the economic indicator that measures the variation in prices of goods and services consumed by the population. It can refer to prices in Spain (National) or an Autonomous Community, as well as a basket of basic products (General) or a sector of the economy such as rentals. The CPI is used, among other uses, as a reference for updating rental prices.

Rental Deposit

The rental deposit is the amount of money that the tenant gives to the landlord as a guarantee of fulfilling the rental contract obligations. The amount of the deposit can vary between one and three monthly payments. It is divided between legal deposit and additional guarantee. The first is mandatory and amounts to one monthly payment, which must be deposited with the competent autonomous body if there is one.

Rental Fraud

A rental fraud is an illegal practice in which a person pretends to have a property available for rent, often using false advertisements. The person looking to rent can be tricked into making the reservation payment before being allowed to see the property. Once the payment is made, the scammer disappears and the victim discovers that the property is not available for rent. It is important to be cautious and verify the authenticity of any rental offer before sending any type of payment or personal information.

Rental Payment

The rental payment is the amount that must be paid by the tenant during the validity of the rental contract. Usually of monthly frequency, which is why it is also known as monthly payment. If contractually agreed, it may contain other general expenses, fees, or individual services apart from the rent, such as: ordinary expenses of the Property Owners’ Association, IBI, sewerage and/or garbage fees, or utilities.

Rental Receipt

The rental receipt is the amount that must be paid by the tenant during the validity of the rental contract. Usually of monthly frequency, which is why it is also known as monthly payment. If contractually agreed, it may contain other general expenses, fees, or individual services apart from the rent, such as: ordinary expenses of the Property Owners’ Association, IBI, sewerage and/or garbage fees, or utilities.

Rental Update

Rental update is the revision of the rental amount according to the agreements established in the rental contract. It is carried out annually and is normally referenced to the CPI, although recent regulation changes have established caps and new indices that will replace the General Price Index in the future.

Right of First Refusal and Retraction

The rights of first refusal and retraction are two rights that some people or entities have in real estate to acquire a property. The right of first refusal gives priority to a person to acquire a property before any other interested person. The right of retraction allows a person to acquire a property after it has been sold to another person. To exercise them, the right holder must match the buyer’s offer or the demanded price in case there is no purchase offer. The Urban Rental Law by default grants both rights to tenants unless they expressly waive them in the rental contract or document prior to sale.

Seasonal Rental

Seasonal rentals are lease contracts that differ from regular housing contracts by covering a temporary need for accommodation. The contract itself must indicate the reason for temporality (studies, work, etc.) and the tenant’s usual residence. These contracts are governed by Title III of the Urban Rental Law (LAU) and must have a defined fixed duration that cannot be less than 31 nights to not be considered tourist rentals.

Security Deposit or Reservation

Security deposit or reservation is the amount of money that the tenant gives to the landlord or agency as a guarantee that they will sign the rental contract by a maximum date with the agreed conditions. If by the date the contract is not signed due to causes attributable to the tenant, they will lose the deposit and the right to subscribe to the contract.

Sinister

A sinister refers to an event originating in a property, causing material, personal, or third-party damage. In the context of home insurance, a sinister can be a fire, electrical damage, flood, or theft, among others. In the context of rental insurance, sinister events are usually due to defaults or opening of legal proceedings.

Social Rental

Social rental is a lease at a reduced price for people with limited income. These homes are mostly managed by public entities, such as city councils or autonomous communities, and their objective is to provide a housing solution to those who cannot afford market-price housing. Social rental aims to guarantee the constitutional right to decent and adequate housing for all people.

Sublease or Assignment

Sublease or assignment refers to the situation where a tenant decides to transfer the use of all or part of the rented property to another person, free of charge or in exchange for economic benefit. In the case of sublease, the tenant transfers total or partial use of the property to another person, while in assignment, the tenant transfers the complete rental contract to another person, who becomes the new tenant. Both situations may be allowed or prohibited according to what is established in the rental contract and applicable legislation.

Subrogation

Subrogation is a legal term used to refer to the change of ownership of a contract or debt in favor of another person. In real estate, subrogation refers to the transfer of a rental or mortgage contract from one person to another. This means that the new holder assumes all obligations and rights of the contract or debt, including payment of rent or mortgage installments. Subrogation can be agreed between parties or imposed by a legal norm or consequence of another act (sale, inheritance, etc.). In any case, it is important to ensure that all legal requirements are met to perform a subrogation and that all implications it entails are understood.

Supply Holder

The supply holder is the person or entity that has contracted utility services in a home, such as water, electricity, or gas. The supply holder is responsible for paying the corresponding bills and maintaining the associated installations in good condition.

Tenant

The tenant is the person or entity who receives the right to use a property in exchange for rent. The tenant is who signs the rental contract with the landlord.

Total Return

The total return of a property is the sum of the gross yield and the capital gain, or variation in the sale value of a property between two years. It gives a complete view of the real estate investment return by taking into account the two main ways of generating value from it (rent and sale).

Tourist or Vacation Rental

Tourist or vacation rental refers to the frequent transfer (for more than 3 months per year) and for profit of an entire home using the usual channels of tourist offer. It is subject to autonomous tourist regulations. These rentals are excluded from the Urban Rental Law (LAU). To offer this type of rental, it is necessary to have a tourist license.

Urban Rental Law (LAU)

The Urban Rental Law (LAU) is the regulation that governs rental contracts for any type of urban property except those considered as tourist rental. This law establishes the rights and obligations of both landlord and tenant, as well as the conditions and requirements that rental contracts must meet, including aspects such as duration, price, guarantees, and renewals. Additionally, the LAU also establishes procedures for resolving conflicts that may arise between parties. Published in 1994, it has undergone numerous modifications, the latest through the Law for the Right to Housing of 2023.

Usable Area

The usable area of a property refers to the habitable space available for use, excluding structural elements like walls and pillars. Usable area is a key metric in determining a property’s functionality and value.

Vandalism Acts

Vandalism acts are acts of intentional damage to properties (building) or goods (contents). For an insurance company to cover such damages, it is therefore not enough that there has been misuse of them, but there must be the intention to cause damage to them.