New regulations on real estate leases in Argentina

by 11 Feb 2024Companies, Contracts, Doing business in Argentina, Individuals

Argentina has new regulations on real estate leases under the Emergency Decree No. 70/2023 (hereinafter, the Decree). The Decree repeals, substitutes, and incorporates rules into the Argentine Civil and Commercial Code (hereinafter, the CCCN), and repeals leasing laws.

As an emergency decree, the Decree must be approved or rejected by the National Congress; until the legislative body rejects it – if it ever does so – the Decree is in force. Consequently and irrespective of any judicial injunctive relief or sentence that may suspend its effectiveness or declare any of its aspects unconstitutional, it is of interest to briefly review its regulation of real estate leases.

1) Repeals

The Decree repeals Law No. 27551 which had substituted and added certain articles on real estate leases to the CCCN regime, establishing additional provisions to the CCCN in certain matters (such as, for example, admissible collaterals, mandatory price adjustment guidelines, and dispute resolution methods).

It also repeals the following articles of the CCCN: 1202 (on payment of necessary improvements), 1204 (on the loss of luminosity of the property), 1204 bis (on the compensation of expenses), and 1221 bis (on renewal of the lease).

2) Amendments

The Decree replaces the following articles of the CCCN: 1196 (on deposit, guarantee, and periodicity of payment), 1198 (on the term of the lease), 1199 (on the currency of payment and updating), 1220 (on termination attributable to the lessor), and 1221 (on early termination).

It also incorporates subsection (d) to article 1219 of the CCCN (on termination attributable to the lessee).

3) Main new regulations regarding real estate leases in Argentina

a) Deposit, collateral, and periodicity of payment

The parties are free to determine the amounts and currency delivered as security or collateral deposit, and how they will be returned at the end of the lease.

The parties are free to agree on the frequency of payment, which may not be less than monthly (CCCN, article 1196).

b) Term of the lease of real estate

The term of the lease for any purpose may be freely established by the parties.

If no term has been established, (i) in the case of temporary leases, the term established by the customs and practices of the place where the leased property is located, (ii) in the case of leases for permanent housing, with or without furniture, it will be two (2) years and (iii) for other purposes it will be three (3) years (CCCN, article 1198).

c) Currency of payment and updating.

Rents may be established in legal tender or foreign currency, at the free discretion of the parties. The lessee may not demand that payment be accepted in a currency different from that established in the contract.

The parties may agree on the adjustment of the value of the rent. The use of any index agreed upon by the parties, public or private, expressed in the same currency in which the rents were agreed upon, shall be valid. If the index chosen is no longer published during the term of the contract, an official index of similar characteristics published by the National Institute of Statistics and Census will be used if the price is fixed in national currency, or the one that fulfills the same functions in the country that issues the agreed currency of payment (CCCN, article 1199).

d) Termination attributable to the lessee

Subsection d) was added to article 1219 of the CCCN, allowing the lessor to terminate the lease of real estate in advance for any cause established in the contract.

e) Termination attributable to the lessor

The lessee may terminate the lease if the lessor fails to comply with:

(i) the obligation to keep the thing fit for the agreed use and enjoyment, except when the damage has been caused directly or indirectly by the lessee;

(ii) the guarantee against eviction or redhibitory defects (CCCN, article 1120).

f) Early termination

The lessee may, at any time, terminate the lease by paying the equivalent of ten percent (10%) of the balance of the future rental fee, calculated from the date of the notice of termination until the date of termination agreed in the lease (CCCN, article 1221).

g) Other provisions

As a consequence of the derogations made specifically in the leases of real estate for housing purposes, it is now possible to, among other things: (i) require the payment of rent in advance for periods longer than one month; (ii) request security deposits for an amount greater than the amount equivalent to the first month’s rent and agree on the form of updating the refund; (iii) request the signing of promissory notes or any other document that is not part of the original contract.

Given the important changes in the regime and the uncertainties that persist as to the final destination of the reforms introduced by the Decree, it is more important than ever to have the proper professional advice, whether it is for housing leases or commercial real estate leases.

If you want to review specifically real estate leases for business purposes, please, visit the following post on our Legal Blog: https://cspabogados.com.ar/en/commercial-lease-agreement-in-argentina/

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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