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Debts, “illegal” increases, and “imaginary” leases: landlord-tenant disputes that end in court

Debts, “illegal” increases, and “imaginary” leases: landlord-tenant disputes that end in court

Non-compliance with rent payments are the most common cases that end up in court, but situations such as illegal homes or dwellings that are paid for but remain unoccupied are becoming increasingly important, real estate law professionals explain.

“Illegal” increases in rents, which in some cases reach nearly 50%, are notorious for tenants’ debts, unauthorized works, and houses rented by “ghosts”. These are the main problems that put landlords and tenants in disputes in courts that, according to experts in housing law, are “taking more and more time” to decide.

There are even cases where the accumulated debt of the owners reaches several thousand euros and it takes several months to recover the amount. Also because, as the lawyer Catarina Gomez, who specializes in real estate law, explains, there are “non-uniform decisions between courts”.

Such was the case of a landlord from Viana do Castelo who in 2014 signed a lease for a “warehouse and industrial activity”. The agreed rent was 400 euros, but between November 2017 and May 2019 the tenants did not pay a cent.

As justification, the tenants claimed that since the beginning of the contract term, the property, a suite on the ground floor, had roof problems, which allowed water to enter the property’s interior – meaning that in 2018, part of the goods batch was completely damaged, causing some damage. Not less than 46,557.60 euros.

The case reached the Guimarães Court of Appeal in 2020 after the judges ruled, in the first instance, that the landlord, by failing to carry out the necessary works, failing to perform his duty, “contributes decisively” to the non-payment of rents..

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The appeal judges had a different understanding and ended up convicting the tenants of paying more than nine thousand euros for the delay in rent payments, stressing that the fact that the landlord needs to do work on the property is not a valid excuse for this. The value is not paid.

In disputes between tenants and landlords that end after a lawsuit is filed, tenant non-compliance is the most common situation noted by both the Associação Lisbonense de Proprietários (ALP) and the Associação de Inquilinos Lisbonenses (AIL). “These are disputes that cannot be resolved in any other way and end up in court, and most of them arise from non-payment of rents by tenants,” confirms Antonio Machado, Secretary General of AIL.

Antonio Machado also adds that the rise in housing prices across the country has created many difficulties for those who rent a house “who, nowadays, are forced to share the space with strangers”. “The higher the price, the greater the risk of default,” he warns.

Luis Menezes Letão, President of the ALP, assumes that “the issue of leasing always involves significant litigation”, but he ensures that there is a new and recent phenomenon of bringing many cases to court. According to the Government’s More Housing package offer, landlords are “increasing rents because they fear not being able to realize future increases in value”.

“What we have seen recently is that landlords want to terminate contracts so they don’t rent more. There are many people who want to leave the market, because they want to put their properties up for sale or use them for some other purpose.”

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The problem, he says, is that these disagreements eventually end up prolonging over time. “It takes between one and two years to reach a decision in the first degree,” the former president of the Bar Association confirms.

In the same vein, illegal rent increases have also become frequent, says lawyer Catarina Gomez. In many cases, he warns, tenants find themselves “in a position of semi-submission to the landlord”.

“We are aware of many situations where landlords send illegal extrapolations to increase rents and tenants, often afraid of losing their place and finding out that the prices of the houses around them are unaffordable, end up negotiating a raise when they don’t want to.” We even have to do it. He says, explaining: “We are talking, for example, of a contract in which the rent of 300 euros suddenly rises to 450, which puts great pressure on a family with financial difficulties.”

The general secretary of the Lisbon Tenants Association also confirms the existence of these issues, as some landlords try to move forward with increases beyond what has already been contracted: “They are usually challenged in court and have no follow-up.”

Antonio Machado, representative of the association, points out that when tenants do not agree to renegotiate the rental price, some methods sometimes become more “aggressive”. “There are owners who change the lock on the doors.”

Paid but unoccupied homes

In addition to lawsuits arising from non-payment of rents or illegal updates to them, it is also common for leases to exist without a license for this purpose. “I had a very recent situation with renting an attic,” says Catarina Gomez, explaining that the space “didn’t have a habitable license, even though the owners did all the work to create a bathroom and kitchen.” But, he continues, “the fact is that the lease was deemed void and the lessees were therefore entitled to claim compensation from the landlord in accordance with the lease of a new part for a period deemed reasonable.”

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But also in these cases, he says, “processes tend to take two or three years,” which is very costly for both renters and landlords.

On the other hand, Luis Menezes Leitão, of the Lisbon Owners Association, presents one of the most common cases in the courts regarding the fact that some tenants leave the house they rent without notifying the landlord, making it unoccupied, but continuing to pay the rent. “In cases where the leases are outdated and very attractive, these situations occur frequently.”

“We had cases of landlords in whom the Chamber wanted to raise the IMI level because they said that the house they owned was vacant, but there was a lease agreement with a tenant who did not consume water and electricity, because, in practice, he was not there,” Menezes Letau says, pointing out This is a phenomenon that has led to many evictions.