Editor’s Note
A tenant and long-term YapaTree contributor, Rick Snyder, wrote this informative article from a tenant’s point of view. YapaTree Properties operates a rental service, with many expat tenants. This article highlights issues to consider when selecting an agent to help with your search. But of course, each agent is unique with differing ethical and moral considerations. Below each main point, we’ve included how YapaTree agents approach these issues.
I am continually surprised by how much there is to know about renting a home in Cuenca and how many ways a tenant can take on financial and legal risks without knowing it. I thought I had this thing down after writing a few of my own leases and after numerous talks with my friend, Jeff Schinsky who knows a lot on this subject.
In fact, many of us have found Jeff’s YapaTree articles on renting very helpful. He has made a careful study of renting over more than 10 years and many moves. Renting A Home In Cuenca: Lease Considerations is his third in a series of 3 renting articles. It covers both parties’ rights and responsibilities under the Ley de Inquilinato (Tenancy Law).
It is worth noting that Jeff’s article pertained to the law presented on Lexis prior to July 8 of this year. The site says it updated the document as of that date so I look forward to reading Jeff’s detailed comments about changes in the Facebook Group he administers. Feel free to join Expats Without Agendas and here is a direct link to the post about the new law.
He shared with me that a strong lease is more important than ever as disputes must now be settled in tenancy court. Another change introduces fines for an owner who fails to obtain a formal rent price certification. The possibility of fines for non-compliance may give you some leverage in settling a dispute or otherwise getting the owner to comply with their responsibilities.
In this article, I’m sharing my recent eye-opening rental story along with some observations and recommendations to help you protect yourself.
My Most Recent Renting Experience
The Search
A few months ago I succeeded in renting an apartment for a great place with a cool view, and a lot of interior space in a mercifully quiet neighborhood – Yes, you can find them if you know where and how to look and are patient. But securing it required a lot more time, work, and persistence than it should have. But the other parties involved kept putting up barriers, some of them legally questionable…
Agent Number 1
First, there was the real estate agent who showed me the place and claimed a special relationship with her nephew, the owner. I had told her I needed a minimum two-year lease to which I was entitled by the Tenancy Law. But she waited for the lease signing meeting to tell me the owner would only sign a one-year lease. Ugh. Red Flag Numero Uno.
This was the second time I had been sucked into this situation. This sometimes happens because an agent believes they can collect a commission for a different lease each year instead of one commission for a two-year lease. They may also pitch the landlord on the possibility that one-year leases allow them to increase rent more frequently. Ultimately, it is a good example of not knowing whether the agent is speaking for the owner or themselves.
How YapaTree Agents Handle Rent Term Duration
We have no preference whether the tenant signs for 1 or 2 years. Our business is based on referrals and a happy customer is worth a lot more to us than trying to turn a 2-year lease into 2 separate 1-year leases.
And next came another Red Flag. She presented me with her “standard” lease which contained many objectionable and illegal clauses to “protect the landlord”, as she put it. I told her expats know these tricks and that I was insulted. She bought me lunch to make up for it but did not yield to any of my objections which were based on illegal and highly objectionable clauses. So, I walked away empty-handed and a bit unhappy about having my time wasted.
How YapaTree Agents Handle Standard Leases
We have a neutral lease that doesn’t favor either party. It’s been vetted by numerous attorneys acting for landlords and tenants. We’re happy to adjust it as required and have it reviewed by your attorney prior to signing. The only real consideration here is that this process can take time and the rental market moves quickly. So, the main risk is that the property is rented by someone else before you’re able to have your lease reviewed.
Related Video – Rental Red Flags
End Run to Agent Number 2
I eventually went around the first agent and found another one who I learned had sold the apartment to the owner. The new agent magically obtained his agreement for a 2-year lease which he may have previously conveyed to Agent Number 1. But who knows? Now I was happy because I really wanted the place. And it meant I could stop the plodding and fruitless search I had undertaken after failing to get the cool place a month earlier. I was finally getting somewhere!
YapaTree’s Comments on Going Around an Agent
This should be reserved for extreme cases only. Bypassing the main listing agent is generally seen by the landlord as a red flag on whether they can trust the tenant. This is rarely a good way to start your new relationship. It will obviously also kill any relationship you have with the listing agent.
It’s common to have 2 agents in a rental transaction. The listing agent has direct contact with the landlord and a second agent who brings the potential tenant. The agents generally share the commission which is paid by the landlord.
A common practice, especially amongst expats, is to have an agent they trust work with various listing agents.
Note, that if you contact the listing agent directly, they are unlikely to accept the involvement of the second agent. A better approach is generally to have your trusted agent contact the listing agent so both agents are treated fairly.
We always respect the work of the other agents we work with and hate to see them cut out of the deal. For example, it’s very common for us to have a personal relationship with the owner of a rental property that is shared with us through another agent. We could easily cut them out of the deal and go directly to the owner, but we choose not to because we respect the effort of the other agent and our relationship with them.
Will the Real Owner Please Stand Up?
But soon the biggest Red Flag appeared as we signed the lease I had written in the agent’s office. Note – further below I talk about writing your own lease and making sure it’s the one you sign.
So, I had signed all the pages and the owner was about to do the same when he casually mentioned that he was not the actual owner.
A Power of Attorney Solution
I wanted to save the deal for the apartment. So thinking quickly, we agreed he would sign on the condition that he quickly provided a Power of Attorney signed by the actual owner… who turned out to be his mother who had bought the place for him.
She was the person on record at the tax office as the rightful owner and the one to who the agent had sold the property. So, the agent knew the son was not the owner but tried to push the transaction through anyway! Another Red Flag.
Success
Anyway, a day went by and he produced a “POA” which I showed to my attorney who told me it was invalid for a variety of reasons such as it wasn’t a Power of Attorney. So, I called the agent to say I was canceling the deal and required that “garantia’ be returned.
The agent knew she was in trouble and that I meant business. So then, as if by magic, Mama returned from her vacation home a few hours drive away and the next day she and I signed a clean copy of the lease and voided the first one.
Finally, the deal was done though it was way harder than it should have been.
Landlord Hide and Seek
The most disturbing part of my story was the non-owner representing himself as the owner.
Who does that? It turns out that it may be common. In fact, this was the third time I have encountered it. It seems friends and family do this for the actual owners who find it inconvenient to do it themselves. To me, this is fraudulent and fraught with all kinds of risks for the tenant. For starters, the actual owner could try to evict you for occupying his property illegally and/or request rent that has not been paid to him! And you can easily imagine other risks like losing your garantia or worse.
In my early Cuenca days, I assumed that people operated honestly. But today I assume the opposite, particularly with the most important parts of the transaction. So, confirming ownership went to the top of my checklist now. And I will question some agents’ credibility because they tend to represent the owners’ interests (or their own) without regard for yours. After all, owners pay their commission fee and are often friends or acquaintances of the agents.
The trustworthiness of the agent is critical. Use one who will help you look for apartments and will keep the listing agent and owner honest.
How YapaTree Handles Ownership Concerns
Ensuring you are renting from the true owner is a real issue, especially with the large number of informal agents operating in Cuenca’s rental market. We verify ownership for all of our rental listings.
Dealing with Landlord Hide and Seek
Unless you have complete trust in both the agent and owner, consider backing yourself up as follows:
If the other party tells you he is not the owner, require a legal POA.
I have done this in several situations and walked away when the other party refused… Rather than accepting their POA document, you might have your own attorney draft one for the real owner to sign that gives the other party specific and legally binding authority to execute the lease on their behalf. Remember the one I was presented in my story was totally bogus.
Owners have access to official proof documentation and should produce it when they request it.
Different kinds of such documentation appear at the end of this article under the heading, Proving Property Ownership. If the signer won’t produce acceptable proof, be suspicious. Walking away might be your best course. But if you really want the place, I suggest engaging an attorney or facilitator to find the documentary proof before you sign.
By the way, copies of cedulas attached to a lease do not establish ownership. They simply confirm the signer’s identity.
Other Tips
Present your own lease
You can get help writing your own lease from a trusted agent and from Jeff Schinsky’s articles and Facebook group. Some agents and owners will resist but I have won this contest on 2 important occasions. If you show up with your document first and insist it is the document you negotiate, you can avoid some of the pitfalls I encountered with the “standard” lease in my story and those below.
How YapaTree Handles BYO Leases
We have no issue with a tenant providing their lease so long as it is fair to both parties. The main consideration is the additional time it may take to review it, potentially allowing for another tenant to secure the rental.
Look for the pitfalls
If you must use their lease form, here are some examples of Red Flag language that could cause you to lose money or your apartment. Jeff Schinsky offers some good examples of these and I think some are repeated below along with others:
- Forfeiting your right to challenge the rental price using the municipality’s calculation for the commercial value of the property. This clause is actually illegal and you could blow it up in court or mediation but who wants to go through the expense and uncertainty of those processes to validate their rights?
- Waiving your right to the eviction process. Don’t do it. You are giving up at least two additional months of the grace period the law provides to you if you miss 2 rent payments. Even if you always pay your rent on time, consider that you may encounter just cause to pause the rent to get the landlord’s attention.
- Agreeing to termination of the lease for missing a single utility payment. This is ridiculous since you may miss a utility payment for reasons that are out of your control.
- Agreeing to pay more than a month’s rent if you terminate the lease early.
- Agreeing to give more than 30 days’ notice prior to the termination date of the lease to communicate that you will leave at the end of the term. Where there is a written or verbal contract and the length duration has not been specified, ART 35 requires the tenant to provide at least one month’s notice. While the landlord must generally provide 90 days to you that he will not extend the lease. I have seen owners slip in a tenant requirement for 60 or 90 days. Preserve the flexibility of timing that the law gives you to stay or go…
- Agreeing that you received the place in “perfect” condition. You didn’t even if it is brand new and you don’t want the responsibility to return it that way or you may end up spending money to fix blemishes you did not create.
Insist on complete and precise information
Many leases are copy and paste jobs from previous contracts. I have been presented with these as ready to sign though they contained incorrect/incomplete property addresses, names, bank account numbers utility account numbers, etc. Do not expect careful proofreading from the other parties. Make sure the following area is included accurately so there is no future confusion:
- Number and type of pets you are allowed. This one somehow gets dropped in revisions for some reason and you want it in your lease for avoidance of future argument. If it’s a condo or other property that has central administration like an HOA, be sure they also allow pets for tenants as some only allow pets for owners.
- The correct address and unit number of the apartment
- Your exact name as shown on your cedula or passport and the owner’s exact name and cedula number
- The number of parking spaces and their assigned numbers
- The bodega (storage room) number and location
- The name, Whatsapp phone number, and email address of the landlord. And yours too.
- The bank information (datos bancarios) of the person who will receive bank transfers.
Three reasons for this.
- Bank transfers are a great way for you to demonstrate proof of payment; and, unlike with cash, you can make them even when you are traveling.
- Landlords you pay in cash may also fail to provide rent receipts. Some have been known to return for a second helping of rent for a month for you already paid them because you can’t prove it.
- If the bank account shown belongs to somebody other than the person signing the lease, that’s a Red Flag and a clue that the bank account holder may be the actual owner rather than the person signing. Looking back that is exactly what happened in my prior lease. Fortunately, the signer was a good stand-in landlord but he could easily have turned out otherwise.
So, get the following banking details included to transfer payment whether you plan to pay in cash or not: Name of the account, Cedula number, Name of the Bank, Account number, Type of account (Ahorros o Corriente), and the email address.
Get a copy of the lease to be signed a few days beforehand.
It sounds like a no-brainer to get the final lease version a few days before the signing meeting. But I have found it important to do so because there is always a new version of the lease presented at the signing that includes some “updates”- which can include some of the Red Flag pitfalls shown above!
The problem with this last-minute versioning is that it gives you about 5 or 10 minutes to review a binding legal document in Spanish. I don’t know too many expats who can do that. It has happened to me several times and I sure couldn’t manage it. Penalties and other nasty clauses were added that I missed.
Trust me. It’s easy to succumb to this last-minute “update” tactic. So if it happens, push back and request a day or two to review it. The others will wait a few days while you have a trusted agent or expert review it with you. And if they won’t, do you really want to sign an agreement with them?
Once you are satisfied with the lease, bring your own printed Spanish copies and an English referral copy for yourself to a signing at a later date. Avoid accepting their new digital copy or sharing a digital copy that can be manipulated.
Avoid paying the garantia until both parties sign the lease
This sounds like another no-brainer rule but it is tempting to ignore it when you find the perfect apartment and the agent or owner says they need a deposit to hold it for you. I have handed over cash to hold several places and ended up losing sleep over whether it would be returned if we didn’t sign a lease. And it diminished my lease negotiating power. Such situations have turned out ok for me but some people have lost their security deposits.
By the way, getting a receipt for the garantia is not a substitute for this rule – unless you can get a receipt that returns the garantia when you request it for any reason. There may be such a thing but I have never seen it.
How YapaTree Handles Deposits & Lease Signings
We support this suggested approach. But, we’d also add that this is rarely possible in practice given the competitive nature of Cuenca’s rental market.
We’ve had numerous instances where a tenant is unable to secure their ideal property because a different party has paid the deposit first.
Our suggested approach is to request a draft of the contract. Once this draft has been approved, then pay the deposit and receive a detailed receipt. This deposit receipt should specify that if the tenant backs out, then they will forfeit the deposit. But, if the landlord backs out, they must return the deposit and pay an additional amount as compensation. It can be more difficult to enforce the additional penalty, but we are yet to have a single instance where the landlord has backed out and not paid back the deposit to the tenant.
Proving Property Ownership
Whilst there are various methods of proving who owns the property, perhaps the most straightforward is to obtain the Public Deed (Escritura Pública) from the Property Registry (Registro de la Propiedad). The escritura pública contains detailed information about the property, its boundaries, any encumbrances, and the names of the current and previous owners.
Wrapping up
Navigating the rental market in Cuenca can be challenging, but being well-informed and vigilant can significantly mitigate potential risks. From understanding the latest Tenancy Law updates to recognizing red flags in lease agreements, preparation is key. Ensuring that you identify the true property owner, using a lease that protects your interests, and thoroughly reviewing all documents before signing are crucial steps.
Remember to:
- Engage with trusted resources like YapaTree and Jeff Schinsky’s articles for the latest insights.
- Verify ownership to avoid fraudulent situations.
- Present your own lease to safeguard your rights.
- Obtain a complete and accurate lease copy well before the signing.
- Insist on precise documentation and bank transfer provisions.
- Seek advice from knowledgeable agents or friends.
- Avoid paying the security deposit until the contract is fully executed.
By following these recommendations, you can protect yourself from common pitfalls and enjoy a more secure renting experience in Cuenca. Share your leasing experiences and tips in the comments below.
Happy hunting and may you find the perfect place to call home!
