Free rental agreement

Free rental agreement: what it is and how it works

Have you ever heard of a free lease agreement? If the answer is no, fear not. Here you will find everything you need to know about this form of rent.

In the free rent housing lease, the landlord makes available to the tenant a property intended for housing subject to payment of a sum freely determined by the parties called, precisely a “free rent”.

In addition to this, it is the law that determines the minimum duration of the contract and other central aspects, such as the causes and methods of renewal following expiration or the possibility of withdrawal by the tenant for serious reasons.

To have a broad view of free rent leasing, below we will go into some central issues and we will try to answer the following questions:

    • What are the properties that can be rented free of charge?
    • What must a free rent lease contain to be valid?
    • How long does the contract last and how often should it be renewed?
    • What happens to the renewal after the second expiration of the contract?
    • What are the landlord’s obligations?
    • What are the tenant’s obligations?
    • What are the tenant’s rights?
    • In which cases does sublease occur?
    • What happens in the event of the tenant’s death, separation or divorce?

Let’s proceed step by step.

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What are the properties that can be rented free of charge?

There is a long list of properties strictly excluded from the free rent lease. Here are which ones:

  • Prestigious properties: that is, restricted properties, stacked as A / 1, A / 8, A / 9, for which the discipline of the civil code applies
  • Public housing units (also called “social housing”)
  • Vacation homes
  • Non-residential properties (garage, garage, cellars)

The residential use of the property is confirmed by the certificate of viability issued by the Municipality and by the energy performance certificate (APE) issued by qualified professionals and valid for 10 years.

What must a free rent lease contain to be valid?

The lease agreement with free rent must be drawn up in writing under penalty of nullity, therefore it must be written and countersigned by both parties and must contain the following essential data:

  • The particulars of the contractors
  • The overall description of the rented property, cadastral data and APE declaration
  • The amount agreed by the parties and the terms of payment
  • The duration of the leas

How long does the contract last and how often should it be renewed?

Regarding the duration of the contract, it must be emphasized that by law it cannot be less than 4 years. In addition, as many can be added to these in the form of automatic renewal.

This, in the event that the parties agree on these terms and in the event that a request for termination is not presented by the tenant at the first expiration of the contract.

In this particular context, the contract is commonly defined as “4 + 4”, but only in particular cases will it be possible to terminate it early, namely:

  • If the tenant does not pay the rent
  • If the owner has a proven need to live there

Even after the second contract expires – i.e. after 8 years – it will be possible to renew the contract.

The termination of the contract, on the other hand, must be communicated at least 6 months in advance. Furthermore, the agreed amount cannot be subject to changes even in the following four years.

After the first deadline, the renewal for another 4 years becomes automatic, except in the case in which two hypotheses arise.

First hypothesis

The first hypothesis occurs when the landlord communicates his “refusal of renewal”to the tenant with at least 6 months before the first deadline.

Refusal is allowed only in some cases provided for by law, such as:

  • The destination of the dwelling for the landlord’s own use
  • The reconstruction/renovation of the building
  • The intention to sell the property

The landlord will therefore be required to indicate the release date of the property and in particular to indicate the specific reasons for the refusal.

If what is indicated in the notification of denial is not implemented, the landlord will be required to pay damages to the tenant or will have to restore the lease contract illegally subject to cancellation.

Second hypothesis

The second hypothesis of non-automatic renewal occurs, however, when the tenant has recourse to the right of withdrawal. The reasons for withdrawal – which is not the responsibility of the landlord – can also be provided for in the rental contract.

In any case, the law always allows the tenant to withdraw for proven reasons. The notice of withdrawal must be given to the lessor by registered mail and with a term of at least 6 months unless the parties have stipulated different conditions in the contract.

In the event of an unlawful withdrawal, the landlord has the right to claim damages. Furthermore, if the first deadline has come, the landlord decides to sell the property to a third party, the tenant can resort to the right of first refusal on the house.

What happens to the renewal after the second expiration of the contract?

Here is what can happen, after 8 years, or at the second expiration of the contract:

  • If the tenant and landlord continue to perform the contract without raising questions or problems of various kinds, we will continue with a tacit renewal of the contract for another 4 years.
  • If one of the parties wishes to renew the contract, but under different conditions, the interested party is required to communicate the renewal proposal to the other party 6 months in advance before the expiry of the contract.

Therefore, who will receive the renewal proposal?

  • You will be able to accept the proposal, and in this way, the contract will continue with new conditions
  • You will be able to refuse the proposal, and therefore the contract will terminate on its natural expiry
  • You can make a counter-offer under different contractual conditions, and therefore accepted by the first proposer will be required

In any case, the reply must be communicated by registered letter and sent to the counterparty within 60 days of receipt of the renewal proposal.

If one of the parties has no interest in renewing the contract, the refusal must always be communicated by registered letter and the recipient must be aware of it at least 6 months before the expiry date.

Consequently, those who receive the cancellation:

  • You will be able to accept the cancellation, and so the contract will terminate on the normal expiry
  • You can refuse the cancellation and propose new contractual conditions, or you can ask to keep the contract at the initial conditions
  • Also in this situation, it will be necessary to reply by registered letter and send it to the counterparty within 60 days of receipt of the cancellation.

What are the landlord’s obligations?

While the lease is valid, the landlord is required to fulfil specific obligations, such as:

  • Deliver the property in good condition and keep it in good conditions of use
  • Ensure that the property is free from defects and ensure that the tenant can enjoy it without complications
  • Issue to the tenant the receipt for payment of the rent, in the event that it is expressly requested by the tenant
  • Take care of the payment of extraordinary maintenance costs
  • Take care of the payment of extraordinary management expenses, in the event that the house is located in a condominium
  • Return the deposit paid and the annual interest to the tenant, in the event that the property is returned in its original condition and there are no other reasons for withholding the deposit and interest
  • Take care of the registration of the contract within 30 days, providing documented communication to the tenant and the condominium administrator in the following 60 days

What are the tenant’s obligations?

The tenant’s obligations are as follows:

  • Take delivery of the property and use it diligently, carrying out repairs if necessary and returning it in good condition at the end of the contract
  • Pay the rent regularly at each agreed deadline even if the property is not used
  • Pay the deposit to the landlord, which can normally amount to a maximum of 3 months’ rent
  • Take care of the payment of ordinary maintenance expenses
  • Provide for the payment of ordinary management costs, if the house is located inside a condominium

What are the tenant’s rights?

The tenant has the right to:

  • Allocate to the lessor a rent higher than that established in the contract
  • Request the judicial authority to return undue amounts paid, and that the lease be brought back to specific conditions provided for by law
  • Request the judicial authority that the lease be brought back to specific conditions provided by law, in the event that the landlord has not registered the contract within 30 days

In which cases does sublease occur?

We speak of subletting when the tenant leases the property to a third party. In order to be able to carry out the total sublease, the consent of the landlord is required.

As regards the partial sublease, however, in the event that the landlord wishes to prohibit it, he will have to insert a specific clause in the lease contract.

If this clause has not been inserted, the tenant can then sublease a part of the house by communicating it by registered letter to the landlord.

What happens in the event of the tenant’s death, separation or divorce?

In the event of the tenant’s death, the spouse, heirs, relatives and kin (usually cohabiting) will replace him in the lease.

If the tenant formally separates or divorces his spouse, the former spouse will take over the contract following the recognition of the right to live in the family home by the judge.

Furthermore, the Constitutional Court has ruled that, in the event of de facto separation, the former spouse can take over from the spouse who owns the contract based on any previous agreements.

In case of cessation of cohabitation by an unmarried couple, if the couple has children, the former cohabitant can take over from the tenant.

Follow our complete guide on the free lease agreement

In this article, we have provided you with all the information you need to get to know the details of the free rent lease.

Follow our guide to understand what are the implications, rights and obligations of the parties involved in this form of the rental contract.

 

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