New Lease Law: Modifications Introduced in the Lease Regulation for Residential and Commercial Use

The project, which was approved by the Argentine Congress on June 11, was passed into law on June 30, 2020 through its publication in the Official Gazette. In this way, the Argentine Civil and Commercial Code regarding lease agreements is modified. Among its main changes, the following stand out:

 

• Electronic address: The landlord and the tenant may establish an electronic address (e-mail) in which the notifications that are made under the lease agreement will be considered valid and binding, being fully effective all emplacements and / or communications that are practiced therein.

 

• Early termination of the agreement: The same regime that allows early termination after six months of the agreement is maintained but including a period of prior notification of one month. However, it is added that, in the case of leases for residential purposes, when the termination is notified three months in advance or more - having passed at least six months of the agreement - no compensation payment corresponds.

 

• Minimum term and renewal: The minimum term of all real estate lease agreements, regardless of the lease destination, is raised from two to three years, with the exceptions already existing in section 1199 of the Argentine Civil and Commercial Code (embassies, tourist purposes, storage of things, etc.). Likewise, in leases intended for residential purposes, within the three months prior to termination, either party may reliably summon the other to negotiate an extension of the agreement within a period not exceeding fifteen days. In case of silence or refusal of the landlord, being duly notified, the tenant may early terminate the agreement without penalty.

 

• Indexing: Lease agreements, regardless of their destination, will be exempt from the prohibition on indexing provided in sections 7 and 10 of the Convertibility Law No. 23,928 and its amendments. However, in the leases for the location of properties intended for residential use, adjustments to the rental fee must now be made only annually and not semi-annually as was allowed in the past. Said adjustments are subject in equal parts to the IPC (Consumer Price Index) and RIPTE (Average Taxable Remuneration of Stable Workers). The rental fee must be set as "single value and for monthly periods", which implies that staggered rentals cannot be agreed.

 

• Guarantees: In residential leases, if a guarantee is required, the tenant must propose at least two alternatives to the landlord, among which are real property titles, insurance policies, bail or the tenant's personal guarantee through proof of income. The landlord cannot require a guarantee that exceeds the equivalent of five times the monthly value of the lease, except in the case in which the guarantee is for income, in which said value may be raised up to a maximum of ten times. Under such conditions, the landlord must accept one of the guarantees proposed by the tenant. It is worth mentioning that the landlord may choose not to enter into the contract when the proposed guarantees do not satisfy him/her.

 

• Charges and contributions of the property: The faculty of the parties to agree that the charges and contributions that are taxed on the property, as well as the extraordinary expenses, are borne by the tenant is eliminated.

 

• Repairs: In case of refusal or silence of the landlord to make urgent repairs, the tenant may make them at the expense of the landlord after twenty-four consecutive hours of notification. If the repairs are not urgent, the landlord has a period of ten calendar days to carry them out.

 

• Deposit: In residential leases, the amount of the guarantee deposit is limited to a single month, equivalent to the value of the first month of rent, regardless of the number of years agreed as contractual term. Likewise, it includes the landlord's obligation to return to the tenant the updated deposit according to the value of the last month of current rent, having to make it effective at the time of the restitution of the property.

 

• Registration of the lease agreement: Lease agreements must be declared by the landlord before the Argentine Tax Authority ( the “AFIP” after its acronym in Spanish), within the term, in the manner and with the scope that said Agency has, under penalty of the sanctions established in Law 11.683 of Fiscal Procedure (fines). If legal actions are initiated, the intervening judge must inform AFIP of the existence of the lease agreements prior to notification of the claim.

 

• Argentine Social Lease Program: The Argentine Social Lease Program is created to adopt measures that tend to facilitate access to decent lease residential through formal contracting. The Argentine Ministry of the Interior, Public Works and Housing, through the Ministry of Housing, will be the Governing Body.

 

The changes are applicable to new lease agreements that are concluded after the publication in the Official Gazette, i.e., as of July 1, 2020.