The commercial lease agreement in Argentina

by 29 Jun 2021Companies, Uncategorized

The commercial lease agreement in Argentina on urban real estate is governed by the Civil and Commercial Code of the Nation (Código Civil y Comercial de la Nación, or CCCN), as amended and supplemented by the new Lease Law No. 27,551[1]. These legal texts set forth public order provisions that the parties must abide by and cannot be set aside by contract. The Lease Law No. 27,551 was repealed by the Emergency Decree No. 70/2023 (hereinafter, the Decree), please refer to the updates in the following article of our Legal Blog: New regulations of real estate leases in Argentina.

1) Formalities

Lease contracts do not have specific formal requirements, and a written instrument will suffice (CCCN, Article No. 1,188).

2) Minimum and maximum terms

All urban leases have a minimum legal term of three years (CCCN, Article No. 1,198). This article was replaced by article 256 of the Decree, please read about the modifications in the following article of our Legal Blog: New regulations of real estate leases in Argentina.

The maximum term may not be longer than 50-years for commercial leases in Argentina  (CCCN, Article No. 1,197).

Unless expressly provided for in the agreement, tenants lack the right to renew the lease at the end of the contractual lease term. Continuance of occupation of the property and payment of the rent after the expiration of the term will not be deemed as a tacit renewal; the contract will remain in force until any of the parties terminates it by reliable communication (CCCN, Article No. 1,218).

3) Rent

The commercial lease agreement´s price may be set in local or foreign currency, and may be adjusted by indexation or other mechanisms (e.g., by pegging the rent to certain goods or services related to the tenant´s activity). VAT is levied on the rent at a rate of 21%.

The Decree replaced Article 1199 of the CCCN, establishing new provisions on currency of payment and updating. Please refer to the reforms in the following article of our Legal Blog: New regulations of real estate leases in Argentina.

A security deposit, and/or insurance policy are common in market practices. The parties to a commercial lease agreement in Argentina usually agree on insurance paid by the tenant.

4) Charges and contributions

The tenant is liable for the payment of the charges and contributions arising from the use to which the property is placed.

The tenant is not responsible for the payment of those that may be levied on the real estate, nor for the extraordinary common expenses.

It may only be established that the tenant is responsible for those expenses deriving from ordinary expenses, being understood as those related to the normal and permanent services available to the tenant, regardless of whether they are considered as ordinary or extraordinary common expenses (CCCN, Article No. 1,209).

Section 1209 of the CCCN was replaced by Section 8 of Law No. 27,551, which was repealed by the Decree[2].

5) Repairs

The landlord must keep the real estate in a condition to serve the agreed use and enjoyment, and make at its own expense the repairs required by the deterioration in its quality or defect, originated by any cause not attributable to the tenant.

In the event of refusal or silence on the part of the landlord in response to a duly notified claim by the tenant to carry out urgent repairs, the tenant may carry out the repairs himself, at the expense of the landlord, after at least 24 hours have elapsed, counted from the receipt of the notification.

If the repairs are not urgent, the tenant must give notice to the landlord to carry out the repairs within not less than 10 calendar days from the receipt of the notice, after which time the repairs may be carried out by the tenant at the expense of the landlord (CCCN, Article No. 1,201).

The tenant is responsible for the mere maintenance improvements of the property (CCCN, Article No. 1,207).

6) Sublease. Assignment of the contract. Transfer of the real estate

Unless otherwise agreed to the contrary, the tenant may sublease a part of the property (CCCN, Article No. 1,214).

The tenant may assign its contractual position to a third party if the landlord consents to it (CCCN, Article No. 1,213, first paragraph, and Article No. 1,636 and subsequent). The contractual prohibition to assign the contract includes subleases and vice versa (CCCN, Article No. 1,213, second paragraph). To sublease the whole property is deemed an assignment of the contractual position (CCCN, Article No. 1,213, third paragraph).

The transfer of the real estate does not affect the lease, and the agreement remains in force vis-à-vis the new owner.

7) Advanced termination

The tenant may terminate the contract at will after six months of the term have elapsed. However, a one-month prior notice is required, and the landlord is entitled to compensation equivalent to one-and-a-half month rent in case termination takes place during the first year of the contract and to one-month rent if it operates afterward (CCCN, Article No. 1,221, Sub-article a).

Article 1221 of the CCCN was replaced by article 262 of the Decree. Please review the new regime of early termination by the tenant in the following article of our Legal Blog: New regulations of real estate leases in Argentina.

8) Electronic address

The parties to the commercial lease contract may establish an electronic address where all notices, communications, and summons addressed thereto shall be deemed effective (CCCN, Article No. 75, paragraph a), as amended by Law No. 27,551. Law No. 27,551 was repealed by the Decree). Please see the amendments by consulting the following article of our Legal Blog: New regulations of real estate leases in Argentina.

9) Registration of the lease agreement

Real estate commercial lease agreements must be declared before the Federal Administration of Public Revenues of the Nation (Law 27,551, Article No. 16). Law No. 27,551 was repealed by the Decree. Please see the amendments by consulting the following article of our Legal Blog: New regulations of real estate leases in Argentina.

[1] Rural leases have a special regime established by Law Number 13,246 (http://servicios.infoleg.gob.ar/infolegInternet/anexos/65000-69999/66159/texact.htm. Spanish text only).

 

[2] For those cases of repeal of rules without being replaced by others, the question arises as to the legal effects, i.e., if the repealed aspects were left unregulated and therefore to the absolute freedom and foresight of the parties or if, on the contrary, the original text of the articles in the CCCN before its subsequent legislative amendments regained its validity.

Mario E. Castro Sammartino

For additional information on these or any other issues related to doing business in Argentina, please, sign up for our Legal Blog or contact us at any time. Our publications exclusively express the author´s opinion and do not purport to be legal counsel on any case. Should you need it, you must consult with your trusted lawyer.

 

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