Have you ever wanted to terminate an urban housing lease contract on a property you own and do not know what alternatives you have? This situation is common amongst several lessors, since, on many occasions due to the lack of knowledge of the current legislation on the matter, they are immersed in situations that make it difficult or even impossible to terminate an urban housing lease contract unilaterally.
In the context of an urban housing lease contract, it is essential to be familiar with Law 820 of 2003 ("Law"). The purpose of the Law is to establish the criteria that must be used as a basis to regulate lease contracts for urban housing. The Law is of public order and therefore of mandatory compliance even upon the existence of a lease contract that provides obligations different from those set forth in the Law. Since, even though the lease contract enshrines the will of the parties, nothing agreed therein may go against the provisions of the Law.
Therefore, it is important to know the Law and to know its most important articles. For example, Article 22, provides the alternatives for unilateral termination by the lessor, and Article 23, explains the indemnity procedure for unilateral termination by the lessor without just cause, which will be discussed in further detail below:
Pursuant to Article 22 of the Law, the grounds for the lessor to unilaterally request the termination of the lease contract are the following:
1. When the lessee does not pay the rental fee and its readjustments within the term stipulated by the parties in the lease contract.
2. When the lessee does not pay the public utilities causing the disconnection or loss of the service or when the lessee does not pay the fee of common expenses in the scenario in which the obligation oversees the same.
3. The total or partial sublease of the property, the assignment of the contract or of the enjoyment of the property, or the change of use of the property, except when expressly authorized by the lessor in the lease contract.
4. When the lessee repeatedly incurs actions that affect the tranquility of the neighbors, or the use of the property for criminal acts or that imply contraventions, duly proven before the police authority.
5. When the lessee makes improvements, changes, or extensions to the property without the express authorization of the lessor, or when the lessee totally or partially destroys the property.
6. The violation by the lessee of the rules of the respective horizontal property regime regulations in the case of properties subject to that regime.
7. The lessor may terminate the contract during its extensions by sending a written notice addressed to the lessee through the authorized postal service, not less than three (3) months before the extension date, and paying an indemnity equivalent to three (3) lease fees.
According to Article 23 of the Law, the payment of the indemnity must be made in the entities authorized by the National Government (Banco Agrario de Colombia), and said the authority will send a copy of the respective title to the lessee or a communication stating the situation. At the time the lessor makes the consignment, he must leave a record in the respective titles of the causes of the termination, the name and address of the lessee.
If the lessee complies with the obligation to return the property on the date indicated, the competent authority will authorize the lessee to receive the payment of the compensation. If, on the other hand, the lessee does not return the property on the scheduled date, the lessor will be entitled to a refund of the compensation paid, without prejudice to the possibility of initiating the corresponding process of restitution of the leased property.
If the lessor wishes to withdraw from the decision to terminate the contract, he must have the lessee's acceptance to proceed and may request the competent authority to authorize the return of the amount deposited.
If the lessor has fully complied with the conditions of (i) sending the notice within the term provided and (ii) having deposited the indemnity, the lessee will be obliged to return the property.
This termination scenario operates under the same conditions, but the amount of the indemnity is one point five (1.5) lease fee payments if the term of the contract has been equal to or greater than four (4) years.
8. The lessor may terminate the lease at the expiration date of the initial term or any of its extensions by invoking any of the following special grounds for restitution:
- When the owner or possessor of the property needs to occupy it for his own dwelling, for a term of not less than one (1) year.
- When the property must be demolished to carry out new construction or when it is required to be vacated for the purpose of executing independent works for its repair.
- When it must be delivered because it has been the object of a purchase-sale contract.
However, if the lease contract is duly recorded in a public deed in the good standing and conveyance certificate of the property, the purchase and sale of the property is not a cause for the termination of the lease contract, and the new owner is obliged to continue with the same.
The cause invoked by the lessor must be stated in a written notice sent to the lessee through the authorized postal service, no less than three (3) months prior to the date of termination or any of its extensions.
The lessor will also be obliged to provide a security deposit (as a guarantee) in cash, bank, or granted by a legally recognized insurance company. The security deposit must be constituted in favor of the lessee for an amount equivalent to the sum of six (6) months of lease fee payments for the current value, to guarantee compliance with the cause invoked.
Thus, if after six (6) months counted upon the restitution of the property, the lessor has complied with the invoked cause, he may request the restitution of the security deposit. If, on the other hand, the alleged cause for restitution has not been complied with, the value of the security deposit will correspond to the lessee.
It is important to mention that the proof of the constitution of the security deposit must always accompany the notice sent to the lessee, otherwise, the lease contract will be automatically renewed for a term equal to that initially agreed.
The difficulties to unilaterally terminate the lease by the lessor sometimes lie in the lack of knowledge of the causes and procedures that must be followed to achieve the effective termination of the lease. However, with the information presented above as a guide, you will certainly be able to duly terminate a lease contract as a lessor.
