Amid the price instability in the long-term rental market, the acute shortage of offers, and the resulting rush, all our efforts are often focused on finding the most suitable and financially attractive housing. Unfortunately, many people ignore the important technical aspects of the agreement and forget to read its contents, which results in confusion and sometimes even conflict situations. The relationship between tenants and landlords involves the rights and obligations of both parties, which they must abide by. These obligations are spelled out in the law and in the particular agreement. In this article, we will cover the main issues related to the performance of contract obligations that must be considered to avoid getting into an unpleasant situation.
Discrimination
The first thing you need to understand at the stage of searching for an apartment and preparing to conclude an agreement is that the potential tenant cannot be discriminated: it is illegal to refuse to sign a rental contract based on gender, descent, or ethnic origin, language, citizenship, religion, beliefs, sexual orientation, age, or disability. The same applies to the offer: rental ads or any other form of advertising cannot contain restrictions or specifications or indicate any preference for tenants based on specified characteristics. Of course, there are lots of different obstacles that get in the way of a tenant. In our understanding, they can also be viewed as artificial restrictions. These include the presence of a guarantor (fiador), the IRS for the previous year (any other form of income proof may not be acceptable), and many other often impossible conditions. Indeed, some of them are settled by making the maximum prepayment (up to 1 year in advance) and more margin deposits. Although it is not entirely legal, the tenants, put under strict conditions, are forced to agree to such drastic measures.
The period of concluding a long-term rent agreement
The minimum rent term is one year, and it must continue for another three years at the first renewal unless the landlord is forced to terminate the agreement for a good reason (we will talk about it later). If the agreement is concluded for a shorter term, it is automatically extended to a minimum term of one year.
For rents concluded after February 13, 2019, automatic renewal is guaranteed for three years if their duration is less than three years and the agreement does not provide otherwise (for example, renewal for periods of equal duration or no automatic renewal at all).
If the landlord decides to sell the house and terminate the rent prematurely, the tenants have priority to purchase, and this right is retained for two years.
The form, main points of the agreement, and a payment
Sure, the agreement must be in writing, but there are different cases. Even in the case of a verbal rent agreement, you can defend your rights. For example, a verbal agreement shall be valid if the tenant can prove that he or she used the apartment with the landlord's consent and paid the rent for six months.
As stated above, when you sign a rent agreement, you will be charged with a security deposit and a prepayment for several months in advance. According to the law, the deposit may not exceed the amount of two rental payments, and regarding prepayment, there is a two-month criterion under the written agreement. However, the reality is far from it. There were cases when a landlord demanded a bank guarantee for 5000 euros or an equal amount in a safe deposit box in a Portuguese bank and an advance payment for a year in cash. Six months of prepayment and more than two deposits are now the standards rather than the exception. I signed a rent in early 2022 when there was no such surge in the market, but I was still forced to sign a payment of 1 deposit, 6 advance rental payments, with the remaining 6 to be paid after six months. But I liked the apartment and the price, so I considered it pointless to alter the agreement, especially since it was the first flaw. Of course, no one can force you to act only on the terms of the landlord. If you have time or are not very picky in choosing your new home, you can find a suitable option that meets all the norms of the law in terms of the number of rents and deposits, as well as the conditions for renewing the agreement. But if you need housing in the short term or have rather strict demands on the equipment or location, you have to play by someone else's rules.
So, you succeeded in finding housing and fixing satisfactory conditions for both parties in writing and got the coveted rent agreement. Now it would be nice to check the correctness and completeness of your information, the address of the rented property (including the house number and floor), because this address will be used for taxes, banks, SEF, etc. Also, Junta de Freguesia of your area will issue your "registration" certificate based on this agreement. These are preliminary details that are usually written correctly. And now about the important: the rules of possible termination of the agreement on both sides, the payment of rent and late fines, the return of the deposit, and a few other major points. Feel free to make comments and amendments on significant points, as they can play a dirty trick on you later in the local bureaucratic system.
The payment
Of course, there can be individual cases, but the standard is the monthly payment, and the date you must pay is specified in the agreement. Keep in mind that if the tenant misses a payment, the legal compensation payable to the landlord is 20% of the amount due. If the situation with late payment is repeated and there is a guarantor in the agreement, the landlord will be forced to notify him and demand underpayment from him. The landlord has 90 days from the first delay. He also has the right to terminate your rent prematurely if you fail to pay on time (more on that below).
Can the landlord raise your rent? Yes, but the rent is usually renewed annually, although there are cases when this increase may not happen. This point must also be prescribed in the agreement.
A small note about payment: ensure that the landlord has registered the agreement in the tax office on the Portal das Finanças in this section. Electronic receipts must be posted here. This will simplify your relationship with the tax office when you submit your IRS.
A little bit about the deposit. The main purpose of the it is to guarantee the elimination of possible damage caused by tenants. If there are no problems, the security deposit cost will be refunded upon the expiration of the agreement. Sometimes there are problems with its return, so it is necessary to check the list of equipment of the house (furniture and devices) in the annex to the agreement. You also need to draw up an acceptance act, with remarks, if any, so that at the end of the rent, you are not blamed for a broken door, which was originally defective, or a crack in the plumbing, for example. Some especially brazen landlords refuse to return the deposit because of mold (claiming to be the fault of the tenants) or other flimsy reasons. If you cannot successfully negotiate independently, you must use the services of a Portuguese acquaintance, your real estate agent, or a lawyer, at the very least. If you are innocent, it may take a little persistence and confidence, but the case will definitely be resolved in your favor.
Termination of the agreement
Once you sign an agreement, you are not obligated to renew or follow it to the end. Everything is reasonable and understandable within the rent termination rules unless we are talking about an abrupt agreement termination. The rent can be terminated by either party, but with some legal subtleties. To terminate the agreement before the set expiration date, you should be aware of the timing you must notify about your intention.
There are two main rules for termination:
- Written notification by registered letter (I will provide more details about what should be included in it below);
- Sending notice of termination in accordance with the statutory deadline.
What are the valid reasons for terminating a rent?
It is not required for the tenant to mention the reasons in the notice of termination of the agreement. You should only comply with the statutory deadlines.
As for the landlord, there are only three valid reasons to terminate the agreement:
- The need for housing for their own residence or for first-degree descendants (for children);
- The need for major repairs that require vacating the property (this may be an estimate for work equivalent to at least 25% of the value of the property or work related to preventing possible demolition of the property);
- Rent arrears exceeding three months (eviction initiation letter). The landlord may terminate the agreement if rent is overdue by more than eight days, more than four times (in a row) within 12 months, but must notify the tenant by registered letter with notice of receipt after the 12 months have expired. Although the agreements often contain other wording: after three months of non-payment, the landlord sends a registered letter of notification stating his intention to terminate the agreement. In turn, in an emergency situation, the tenant may also take advantage of such an option provided by law: in case of involuntary unemployment, permanent disability, or death of the tenant or the person with whom the tenant has been living in a joint household for more than one year, the tenant may terminate the agreement without paying the rent for the period of notice.
Period for termination of a long-term rent agreement
The period for sending the notice of termination depends on the type of agreement concluded, specifically on its prescribed duration. The deadlines to take into account are specified in Articles 1097 and 1098 of Law Nº31/2012 from August 14:
for the tenant:
- 1/3 of the initial term for agreements lasting less than six months (i.e., after 2 months of the rent);
- 60 days (2 months) for agreements lasting six months or more but less than one year;
- 90 days (3 months) for agreements lasting one year but less than six years;
- 120 days (4 months) for agreements lasting 6 years or more.
for the landlord:
- 1/3 of the initial term for agreements lasting less than six months (i.e., after 2 months of the rent);
- 60 days (2 months) for agreements lasting six months or more but less than one year;
- 120 days (4 months) for agreements lasting one year or more but less than six years;
- 240 days (8 months) for agreements lasting more than six years.
If you fail to meet the statutory deadline, you must negotiate to minimize or eliminate financial losses. In case of an urgent termination of the agreement by the tenant, for example, some get out of the situation by looking for a replacement, i.e., new tenants.
How to write a letter on rent termination
The rent termination letter must clearly express the intent to terminate the agreement. Therefore, it must have the most precise content and identification of the sender and recipient. In addition, it is crucial to include the reasons for termination (at least on the part of the landlord) so that both parties are protected throughout the process. Here are the points that should be added to the letter:
- The date of sending the letter;
- To whom is the letter addressed: to the landlord or the tenant;
- Identification of both parties involved in the rent (personal data from the agreement);
- The indication that this is a termination letter: you must mention that you are sending it within the period for termination;
- Mention of the address of the property, which is specified in the rental agreement;
- The reasons for rent termination;
- Information about the expected date of vacation of the property.
It's essential: when you send a registered letter of termination, always keep a copy of the letter and the proof of sending, so you can use it as evidence if necessary. You can send a letter by the Portuguese postal service CTT with a notification.
Dispute settlement
The tenant is not always the only one who wants to terminate the agreement. Sometimes the landlord tries to evict his tenants somehow without a good reason. There are cases when unfair landlords pressure tenants (for example, by removing mailboxes or causing other minor household incidents) to force them to terminate the agreement and move out, even though this is punishable by law. They can start a repair. Or worse, they may not perform the necessary repairs. If the tenant feels harassed, he or she can subpoena the landlord or go to the competent local authority and request an inspection of the home to check it for circumstances that could jeopardize its use. Generally, the landlord is responsible for the construction work in rented houses. However, the landlord may "resist" fulfilling his or her obligations. For cases when tenants incur additional expenses that are not part of their obligations, such as urgent work (which the landlord refuses to do or pay for), the law has created the ability to enforce the application to guarantee the tenant's rights. The application must be submitted by the tenant to the judicial authority for rents, O Serviço de Injunção em Matéria de Arrendamento (SIMA), which is a court office with exclusive competence throughout the country. The office is obliged to enforce the application within 15 days. The submission of the application does not require the creation of a judicial representative.
As we see, under the right circumstances, the conclusion and execution of a rent agreement are clear and simple. However, in case of unforeseen situations, both on the part of the landlord and the tenant can cause a lot of troubles and nuances to which we usually don't even pay attention. If you are currently looking for housing, you can always seek advice from one of our real estate agents, and if you already have a problem, our lawyer can help solve it. In any case, tenants' rights under the law are protected more than the rights of landlords. You need to be aware of this and have the courage to defend your interests independently or with competent assistance. Also, the Consumer Rights Act, the consumer protection association, and the Direção-Geral do Consumidor (Office of Consumer Rights) can help protect your rights.
Unfortunately, crooks are everywhere. I wish everyone good luck in this difficult matter, and I hope this article was helpful.
