Commercial Eviction and Lease Termination in the Balearics

Under the Spanish Urban Leases Act (LAU), effective 1 January 1995, a tenant's delay in payment and default on commercial rent in the Balearic Islands presents financial risks, including the accrual of VAT.

1. Commercial Lease Termination and VAT Obligations

Commercial leases (known as uso distinto de vivienda) are primarily governed by the will of the parties as expressed in the contract, pursuant to Article 4.3 and Article 35 of the Ley de Arrendamientos Urbanos (LAU). In the absence of specific clauses, Article 1124 of the Civil Code allows for the resolution of the contract upon any material breach, such as non-payment of rent.

Regarding tax obligations, Value Added Tax (VAT/IVA) is a national tax in Spain. As a landlord, you are generally required to liquidate the 21% VAT to the Tax Agency (AEAT) on a quarterly basis (Model 303) once the rent is legally due, regardless of whether the tenant has actually paid. These tax obligations are independent of the procedural requirements for eviction.

2. Formal Notice and the Right to Cure (Enervación)

To initiate the eviction process effectively, a formal notification via Burofax (a certified postal service with proof of content) is essential. Under Article 22.4 of the Ley de Enjuiciamiento Civil (LEC), the landlord must serve a formal, reliable payment demand at least 30 days prior to filing the eviction lawsuit to deprive the tenant of the right to "enervación."

Enervación is the tenant's legal right to stop the eviction by paying all outstanding debts. By providing this 30-day notice, the landlord ensures that the tenant cannot simply pay the debt after the lawsuit is filed to remain in the premises.

3. Mandatory Legal Representation and Court Timeline

For all commercial eviction proceedings in Spain, the intervention of both a lawyer (abogado) and a court solicitor (procurador) is mandatory. This requirement applies regardless of the amount of debt owed. While Articles 23.2.1º and 31.2.1º of the LEC provide exceptions for claims under 2,000 euros, these exceptions only apply to trials determined by amount (cuantía). Evictions are governed by subject matter (materia) under Article 250.1.1º of the LEC, making full legal representation a strict requirement.

Upon the admission of the lawsuit, the court issues a decree (Article 440.3 and 440.4 LEC) granting the tenant 10 business days to:

1. Vacate the premises voluntarily.
2. Pay the full debt (if the right to enervación has not been waived or blocked).
3. File a formal opposition (oposición) outlining legal grounds for the default.

If the tenant fails to respond within these 10 business days, the court will issue an automatic eviction order (lanzamiento) without further hearings.

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