Canary Islands Commercial Premises Deposits & Guarantees

Formalizing a commercial lease (B2B) for a premises, office, or warehouse in the Canary Islands involves two distinct layers of security: the mandatory statutory deposit (fianza) and any additional contractual guarantees agreed upon by the parties. While commercial leases enjoy high levels of "freedom of contract," the handling of the initial fianza remains strictly regulated by the Canary Housing Institute (ICV) under the framework of the Spanish Urban Leases Act (LAU), effective 1 January 1995.

1. The Mandatory Deposit: ICV and the "Two Months"

Under Article 36.1 of the Spanish Urban Leases Act (LAU), every lease for "use other than housing" (commercial) requires a mandatory cash deposit equivalent to two months' rent. In the Canary Islands, the regional government mandates that this sum must be placed in the custody of the Instituto Canario de la Vivienda (ICV).

• Amount: Exactly two (2) months of base rent (excluding IGIC).
• Deadline: The landlord has one month (un mes, calculated date-to-date) from the signing of the lease to formalize the deposit with the ICV (Art. 8.1, Decreto 113/2006).
• Third-Party Registry: Landlords must be registered in the Canary Islands Government's "Third-Party Creditor" system to process the deposit and eventual return.
• Sanctions: Failure to lodge the deposit is a serious administrative infraction. For voluntary late registration (without prior notice), surcharges apply: 5% (within 3 months), 10% (within 6 months), 15% (within 12 months), or 20% (beyond 12 months). If detected during an audit, fines range from €3,005.07 to €30,050.61 (Art. 81.2.g and Art. 83.2, Ley 2/2003).

2. Additional Guarantees: The B2B Advantage

Beyond the mandatory two-month fianza, the parties are free to negotiate additional security measures under Article 36.5 of the LAU. Unlike residential leases (where additional guarantees are capped at two months), commercial leases have no statutory maximum.

• Bank Guarantees (Aval Bancario): It is common for landlords to request an unconditional bank guarantee covering 6 to 12 months of rent, especially for prime retail locations or tenants with limited credit history.
• Cash Deposits: Additional cash deposits beyond the mandatory fianza are permitted. These are held privately by the landlord (or in escrow) and do not need to be lodged with the ICV.
• Personal Guarantees: For small businesses or startups, landlords may require personal guarantees from the company directors.

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