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THE RENT-FREE LEASE

  • 25/08/2023
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Leases of urban real estate for residential use are divided into two groups:  


a) rent-free leases (4+4);

b) agreed leases (3+2).  


The difference is about:  

a) the duration of the contract;

b) the amount of the rent.  


In the case of rent-free leases, the parties are free to set the amount of the rent in accordance with market prices; in agreed leases, on the other hand, the rent is established by the parties according to certain criteria laid down in territorial agreements signed by the most representative building ownership organisations and tenants' organisations.  


APPLICABLE RULES  


We recall leases for residential use are governed by the following regulatory sources:  


a) Civil Code (art. 1571 ff.);

b) Law 392/1978 (Rules about leases of urban property);

c) Law 431/1998 (Leases and release of real estate for residential use).


Law 431/1998 completely reviewed the regulation of leases for residential use.

Previously, the matter was regulated by Law 392/1978, which is still partly in force, and by Law 359/1992, now replaced, which introduced the possibility of entering into free-rent tenancy contracts provided that the tenancy was for a minimum duration of four years, renewable for a further four years.

Some rules of Law 431/1998 do not apply to the letting of listed buildings, public housing, tourist and temporary rentals.  


WHO HAS THE RIGHT TO RENT?  


In the civil law sense, anyone who holds the right of ownership over a property or a share of it may be involved in the administration of the common property.

This means that the lease is valid and effective even if it is signed by only one co-owner.  


FORM OF THE CONTRACT  


According to settled case law of the Supreme Court, lease agreements for residential use must be in writing ad substantiam.

This means that, contrary to the general rule valid for non-housing leases, tenancy agreements for residential use must be in writing under penalty of absolute nullity, which may be detected ex officio by the court and at the request of a party.

Only if the tenant proves that the verbal form has been imposed by the landlord will the nullity be relative, that is detectable only at the tenant's request.

This is called "protective" nullity that the law places in place to protect the tenant, considered a "weaker party".

The written form ad substantiam is also necessary for the termination of the contract.

Any verbal termination agreement must be considered absolutely null and void.


THE RENT  


In a rent-free lease the rent is freely set by the parties.

The term 'freely' does not mean 'arbitrarily'. Even in the absence of mediation, the parties refer to the minimum and maximum rental values per square metre indicated by the Revenue Agency in accordance with the position of the property.

Of course, an appropriate rent will have to take into account the internal state of the property and other specific elements (floor, exposure, facilities, presence of furniture, parking space, etc.).

The amount of the rent results from the written and registered agreement: any agreement granting the lessor a higher rent than that one stated in the contract is null and void.  


DURATION OF THE LEASE  


The minimum legal duration of the free rental agreement is 4 years, renewable for another 4 years.

The rule relates to the minimum duration: leases may be concluded for a longer minimum duration, but never less than 4 years, provided that the rental duration does not exceed 30 years.

This rule is mandatory: if the duration in the contract is less than 4 years, it is automatically brought back to what law established.

The nullity (for contrariety to mandatory rules) is partial and does not affect the entire contract: the invalid clause is replaced by a conforming clause as of right.


REGISTRATION  

The landlord is required to register the tenancy agreement within 30 days of signing it.

Within the next 60 days, the landlord shall notify the tenant and the condominium administrator of the registration in order to update the condominium register.

If the lease is concluded through the mediation of a real estate agent, he is jointly and severally obliged, together with the landlord, to pay the taxes on the contracts concluded as a result of his intervention.


Understanding the rights and obligations arising from a tenancy agreement is extremely important.

That is why it is advisable to seek professional advice before signing any agreement.

The real estate agent also acts as consultant offering valuable support for landlords and tenants, both in terms of the fairness of the rent and the contractual balance between the parties.

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