ANDORRA Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós, Cases & Lacambra
6.16 Forms of Security to Protect Against a Failure of the Tenant to Meet Its Obligations The Urban Rents Law states that, prior to taking possession of the leased asset, the tenant must deliver to the landlord a guaranteed deposit equivalent to a maximum of two months’ rent; depending on the case, this security may be replaced by a bank guarantee. Such deposit is held by the landlord to be returned to the tenant upon termination of the lease agreement against delivery of the leased asset’s keys (return of pos - session over the leased asset). The tenant and the landlord may also agree on additional guarantees to cover payment defaults by the tenant (eg, bank guarantees, specific default insurances or even upfront payment). 6.17 Right to Occupy After Termination or Expiry of a Lease Overall, the tenant does not have the right to continue to occupy the leased asset after the expiration or termination of a commercial lease. Nevertheless, the Urban Rents Law provides for a tacit renewal ( tàcita reconducció ), which takes place if the tenant stays in the leased asset more than 15 days after the termination of the lease agreement without express opposition from the landlord, whereby the lease agreement shall be automatically extended each month without any action by the landlord (or in the same term fore - seen for payment of the rent). The lease agreement may also be subject to tacit extension ( pròrroga tàcita ) for one year upon ter - mination unless the landlord or the tenant gives prior notice to the other party three months before the termination or any extended period expiry date.
To ensure that a tenant leaves on the date origi - nally agreed, landlords will usually conduct an ocular inspection (or similar inspection mecha - nisms as inventories) before the tenant leaves the real estate asset. 6.18 Right to Assign a Leasehold Interest A tenant who has concluded a lease contract for a definite period has the right under Andorran regulatory provisions to lease or sublease all or a portion of the leased premises in so far as there is written approval from the landlord. Likewise, there is a prohibition against subletting by the subleased. 6.19 Right to Terminate a Lease In addition to the events described in 6.12 Restrictions on Use of Real Estate , breach by the tenant of the following obligations stated in the lease agreement entitles the landlord to ter - minate the lease agreement: • expiry of the lease agreement term; • loss or destruction of the real estate asset; • transfer or disposal after the expiry of the legal lease agreement term (four years); • mortgage foreclosure (when the leased agree - ment has been formalised after the creation of the mortgage without the mortgagor’s knowledge); • usufruct extinction (if the beneficial owner had granted the lease agreement and the tenant was aware of such circumstance); • when the real estate is declared to be in a state of ruin; and • compulsory expropriation. The tenant is entitled to terminate the lease agreement without prior notice to the landlord upon verification of the following circumstances:
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