Tenancy Law: Guide for Owners

Do you know what your guarantees and obligations are when you rent your property under the Tenancy Law?

In this post we will highlight the main questions about the rights and duties of the owner that are established in the Tenancy Law (Law No. 8,245 of 1991).

What is the Tenancy Law?

The Tenancy Law mandates the commercial and residential rental market. It consists of a series of regulations that renters and homeowners must observe. Even if your contract is informal or verbal, it will govern the agreement.

In this way, observing and knowing the rules avoids inconvenience, loss of time and makes the rental contract run safely and efficiently. Know that the Tenancy Law is also a criminal law – in Articles 43 and 44, the conducts and their respective penalties are provided for.

In 2009, the Tenancy Law was amended to improve rules and procedures and is referred to here as the New Tenancy Law (Law 12,112).

 

Main points of the 2021 Tenancy Law:

Tenancy law and charge rent by boleto

When renting a property, it is necessary to understand that one of the most important resources to regulate the terms and conditions between lessor and lessee is the rental contract. This document should include, among other information, those referring to payments.

Want to understand how billing for rental properties works? We created a blog post that explains this specific point – Click here!

Tenant Law and Request Property Back

What does the Tenancy Law say about asking for the property back?

There are rules for breaking the contract (article 47), highlighted below:

  1. by agreement of both parties;
  2. as a result of the practice of legal or contractual infraction;
  3. for non-payment of rent;
  4. for carrying out urgent repairs determined by the Government;
  5. because of the termination of the employment contract (if the tenant’s occupation of the property is related to his position);
  6. if asked for your own use, that of your spouse or partner.
  7. if it is requested for residential use of ascending or descending that does not have its own residential property;
  8. if it is requested for demolition and licensed building or for carrying out works approved by the Government;
  9. if the lease’s uninterrupted validity exceeds five years.

The owner of the property can only terminate the contract in 2 specific situations: if he needs the property for his own use and does not have any other property of the type or if the tenant commits some kind of illegal act or breaches the rules of the contract – such as a renovation not allowed. Other than that, he must always wait for the contract to finalize to request the property back.

The tenant, on the other hand, does not need to give specific reasons for leaving the property, as long as he pays the fine established in the contract. However, there is an exception for cases where the tenant is transferred by his private or public employer to provide services in locations other than the one at the beginning of the contract.

Thus, he is not required to pay the fine, as long as he notifies the landlord in writing and presents a document proving the transfer (with full address of the future place of work). Such notification must take place at least 30 days in advance.

Rental Delay

 

What is the maximum amount of a fine in a rental agreement?

Although the Tenancy Law does not indicate any value in cases of delay, Decree No. 22.626 / 33, Usury Law, establishes in Art. 9: “The penalty clause higher than the importance of 10% of the debt value is not valid.”

The Consumer Protection Code establishes a maximum fine of 2%, however, it cannot be considered for rentals because the relationship between Owners and Tenants is not considered as consumption.

So, the ceiling for the late payment penalty on a rental agreement is 10%. When charging for bank slips, this amount can now be automatically charged.

See in this blog post, how to collect rent late politely .

What is the maximum amount of interest on a rental agreement?

Regarding interest, we have in accordance with the National Tax Code in its Article 161:
“If the law does not provide otherwise, the interest on arrears is calculated at the rate of one percent per month.” Thus, it is possible to charge interest of 1% per month, or the equivalent to 0.033% per day overdue on top of the amount due.

What does the Tenant Law say about asking for the property back in case of delay?

The owner must respect the deadlines defined by law and cannot expose the defaulting tenant or invade or take over the property.

It is the owner’s right to file an eviction action in cases of non-payment. The Tenancy Law does not stipulate a tenant’s default period or time of default. The Eviction Action may be made as long as the lessee has not submitted any kind of guarantee. And what does it mean? If the lessee has a guarantor, if he has made rent advances, or has given any other type of guarantee, the owner cannot evict him. Even if the guarantee requirement came from the lessor. He must first use this guarantee, so that only after these attempts have been frustrated, he can evict the tenant. In the event of an advance or deposit of rent, as in some locations it is common to do, the number of rentals is what will determine the deadline for payment of unpaid installments. After this,

The New Tenancy Law has reduced eviction terms, benefiting landlords who are able to recover their properties more quickly. One of the amendments to the Law, which in addition to facilitating eviction contains bad payers, is within the deadline for collection in arrears on arrears.

Before the modification, the tenant could delay the payment of the rent twice in 12 months, and could remain in the property after payment in court of the amount. Under the new rules, the tenant will only be able to delay the rent once in 24 months. In the second delay, the resident may be evicted.

Still with the improvement of the rules, the tenant will have 30 days to vacate the residential or commercial property in the event of a judicial eviction decision favorable to the landlord. That period, previously, was six months.

Tenant does not pay rent and does not want to leave, what to do?

Term of Vacancy

Upon completion of the lease, the minimum term granted in the Law for vacating the property is 30 days.

It is important to know that the owner will never be able to forcefully evict the property. In case the tenant refuses to leave the property, all measures and actions must be taken in court.

See in this post about the request to vacate a rental property.

Direct Rent with Owner

This is a modality provided for in the legislation.

Renting property directly with the owner can be as safe as any other way. The important thing is to be attentive to the contract, make an inspection report … to find out how to rent a house, apartment or any property directly with the owner, get your contract model and inspection report , stay tuned to the post we have prepared for you.

After all, there are several processes to be followed to maximize the security of the process. I see this post by clicking here.

 

Rent Readjustment

The annual rent adjustment is the lessor’s right, as provided for in article 18 of the Tenancy Law.

Art. 18.  It is lawful for the parties to fix, by mutual agreement, a new value for the rent, as well as to insert or modify the readjustment clause.

Generally, a reference index (IGPM, IPC…) is chosen, which must be quoted in the lease to calculate the adjustment.

Who is responsible for renovating and maintaining a property rented under the law?

It is normal to have difficulty understanding the Tenancy Law, even people connected to the real estate market, such as brokers and real estate agents, have many doubts. Of real estate. And one of the most controversial issues is related to the maintenance of the property.

The ideal is that in the lease agreement determine the responsibility of the parties in case of carrying out repairs or renovations to the leased property. Basically, the maintenance services are the responsibility of the tenant and the structural reforms are the responsibility of the owners. The landlord must deliver the property in conditions of use to the tenant, who must return it in the state that received it. However, it is always valid to have a dialogue about the need for eventual reforms / maintenance.

Another very important point is to carry out an entrance inspection on the property. This can be done by taking pictures of the property, in order to record as much detail as possible the state of conservation of the property before the rental period. After all, it is up to the landlord to return the property in perfect condition of use. Another important clause is the lessee’s obligation to return the property under the same conditions in which it was found.

 

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