Urban leases

The Supreme Court (TS) resolves a case of a bar-café in Ibiza whose lease contract dated back to the late 80s and was agreed with mandatory extension . The owners believed that the contract had terminated on December 31, 2014, due to the transitional rules of the Urban Leases Law of 1994, and therefore asked the tenant (a company) to vacate the premises. The tenant, however, refused because she believed that the termination was not so clear and defended her position in court. Meanwhile, the owners argued that they were

losing money because they could not rent the premises for a higher rent ; in fact, there was an agreement for the person/company already operating the business (as a sub-tenant) to pay a higher amount per month, but that , in fact, there was an agreement for the person/company that was already operating the business (as a sub-lessee) to pay a higher amount per month, but that could not be activated until possession was recovered . Finally, a judgment of the Provincial Court declared the relationship extinguished and, after several procedural incidents, the premises were returned in February 2019. The owners claimed damages and losses (lost profits) for all those years of "extra" in the premises.

The key point of the Supreme Court is from when that compensation can be demanded. The Supreme Court states that, in contracts of this nature, not every delay in vacating automatically generates liability, if the situation was debatable and the tenant defends themselves reasonably, they cannot be charged the entire bill from day one. But from the notification of the final appeal judgment declaring the termination, the tenant already knows (and cannot ignore) that continuing in the premises is improper and contrary to good faith. Therefore, the Supreme Court establishes that the compensation starts from that notification , and orders to reduce the amount claimed, deducting the previous period.

If you find yourself in a similar situation or have any dispute related to a commercial lease, our professionals can analyze your case and take the most appropriate actions to defend your interests