Spanish Real Estate Property Law. Advice and tips in reference to letting / rental contracts for urban properties in Spain. The guarantee bond or security deposit needs to be deposited with the Valencia Administration Offices.

Unfortunately some of our readers are not aware of the fact that the security deposit (bond) requested from the tenant renting a property or business in Spain, should be deposited at the banks appointed by the Valencia Administration Offices (Valencian Generalitat) by means of form 806 if the property is located in this autonomous Community, although this is also true for many other Spanish autonomous Communities.

Thus, by virtue of Law 8/2004 on Housing in the Valencia Community and Decreto 333/1995 which regulates the leasing bonds regime, the lesser (owner) of an urban property shall require from the lessee (tenant) a bond at the time of signing a rental contract which he should deposit in cash in favour of the Valencia Administration (Generalitat Valenciana) through the fiscal form 806.

In addition to the above mentioned fiscal form and the payment of the guarantee bond, the lesser should also present introduce at the associate banks copies of the rental contract, IBI receipt and Spanish Identification numbers (NIF/NIE), etc.

Upon completion of the contract, the lesser may request the refund of the paid deposit, providing copy of rental contract, stamped copy of the form (806) used to deposit the bond and a document certifying completion / termination of the contract (either by agreement of the parties or Court Order).

Although this rental rules has been in forced for some time the truth is that many landlords who are not aware, need to know that not complying (not making the corresponding deposit) could mean penalties and payment of interests, etc.

One of the worst consequences of not knowing this obligation could be the following: The renter (tenant) can receive tax benefit in his Income Tax return when renting a property used as his habitual residence; however in order for the tenant to receive this tax benefit it is a mandatory requirement that the guarantee bond is deposited as mentioned above.

What is currently happening is that some tenants / lessees who have deducted in their Income Tax return the monthly rental payment for their habitual residence, thinking that the landlord had deposited the guarantee bond, are now receiving sanctions and penalties from the tax authorities which requires them to return the tax benfits plus additional interests.

Therefore if you as lesser (landlord) or lessee (tenant) are renting a property in the Valencian Community (or many others) you must take into account that the rental tenancy agreement must include a guarantee bond (fianza) to be paid by the lessee / tenant which should be dully deposited by the lesser / landlord in the Valencian Administration, as previously indicated and according to the mentioned Housing Law of the Valencian Community.

We advise you to insure compliance with this obligation to avoid unpleasant surprises.

The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.

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