Guide to Apartment Rental Contracts in Colombia
November 18, 2015 By
Jeff
I
have lived in unfurnished rental apartments in MedellĂn for almost five
years and have signed seven different apartment rental contracts. The
rental contracts I have signed have been for terms of either six-months
or one-year.
I’ve seen several blog posts and communications from real estate
firms and foreigners in Colombia that have included some inaccuracies
about the rental laws in Colombia, which drove me to write this guide to
apartment rental contracts in Colombia.
Colombia’s
Law 820 of 2003 governs renting unfurnished apartments in Colombia.
This law spells out regulations for landlords and tenants and has
many specific requirements that are not well-known by many foreigners
renting apartments or looking to rent apartments in Colombia.
Typical Apartment Rental Contracts
A standard unfurnished apartment rental contract in Colombia includes the following sections:
- Name and identification of the parties.
- Identification of the property under contract.
- Identification of the property that is leased, as well as areas shared with the other occupants of the building.
- Price and payment location.
- Term of the contract.
- Appointment of who is responsible for payment of public services
(electric, gas and water) of the property under contract (normally the
tenant)
- Many other terms based on Law 820, such as early termination and renewals.
While apartment rental contracts can legally be verbal, it is highly
recommended that you get a written contract that is signed and
notarized. All the rental contracts I have signed in Colombia have been
in Spanish and notarized.
You don’t need a cedula (Colombian ID) or visa to rent an unfurnished
apartment in Colombia; a passport is all that is needed. My first
unfurnished apartment rentals in MedellĂn were accomplished using my
passport.
This
link includes some template rental contracts for Colombia (in Spanish) in Word format.
Apartment buildings in El Poblado near Santafé mall
Unfurnished Apartment Rental Laws in Colombia
Colombian Law 820 of 2003 spells out many requirements and
regulations for unfurnished apartment rentals in Colombia. I have found
that many Colombians don’t know about all these regulations.
Highlights of the apartment rental regulations found in the law in Colombia include:
1. Tenant must pay rent and services on time – Rent
must be paid in a timely manner and any services such as electricity,
gas and water according to the provisions of the contract must be paid
in a timely manner (make sure to keep receipts).
2. Monthly rent price is limited – monthly rent for
an apartment cannot exceed 1 percent of the commercial value of a
dwelling or the part of a dwelling subject to the lease.
3. Rent increases are limited to inflation – there
can be an increase in the rent every 12 months. The increase cannot
exceed 100 percent of the inflation increase (Consumer Price Index) for
the immediately preceding calendar year.
However, I haven’t experienced a rent increase in four different
renewals and, in fact, I was able to negotiate a lower rental price for
one renewal.
If the tenant believes that the increase made by the landlord exceeds
inflation, the tenant reportedly has six months to request a revision
with the Mayor’s Office of the city where the dwelling is located.
4. There is a penalty for early termination – For a
tenant or landlord to end a lease early, at least three months written
notice must typically be given and there is usually a penalty
(indemnification), which is usually equal to three months rent required.
Because of this pretty stiff penalty, apartment leases in Colombia are rarely terminated early.
5. Landlords can only terminate leases for particular reasons – Landlords are limited in the reasons they can end a lease, which include:
Unilaterally:
- If the tenant is not complying with obligations, such as defaulting in rent payments or public utilities payments.
- If the tenant is subletting the apartment or part of the apartment without the consent of the landlord.
- If the tenant made improvements to the property without the consent
of the landlord or the total or partial destruction of the property.
- If the rented property is being used for criminal acts recorded by the police.
With three months notice and payment of a penalty equal to three months rent:
- When the owner of the property needs to occupy their property, for not less than one year.
- When the property is to be demolished to build a new building, or when required to vacate to do repairs.
- If the owner has sold the property.
The landlord can also terminate a contract if it has lasted not less
than four years, by paying a penalty equal to 1.5 months of rent.
I have experienced two owners that wanted their apartments back early
because they wanted to live in their apartment I was renting. The first
was leased from a woman living in Bogotá who was returning to live in
MedellĂn.
I agreed to this early lease termination as I was already planning to
move. She negotiated with me and ended up paying me two months rent for
terminating early.
The second I experienced a landlord wanting his apartment back early
was because he had sold the property he was living in and wanted to live
in the apartment I was leasing.
I pushed back since I had six months remaining on my lease and the
landlord didn’t want to pay me three months of rent to terminate the
contract early, so he waited until the lease was up.
6. Deposits are not permitted – Deposits are not
really allowed as part of apartment lease agreements in Colombia.
However, such guarantees may be established either indirectly or through
an intermediary such as an insurance company.
This is one of the reasons why real estate agents in Colombia
typically require one or more fiadors (cosigners with property) for
apartment rentals. However, this
fiador requirement can be overcome.
I have heard some foreigners have paid deposits as part of
unfurnished apartment leases in Colombia, but I haven’t paid a deposit
for any of my unfurnished apartment leases.
7. Leases automatically renew – Unless either the
tenant or landlord sends a written notice of termination at least three
months before the lease end date, an apartment lease contract in
Colombia will be renewed automatically.
The lease renewal will be for the same terms if both parties have
complied with their contractual obligations and the tenant accepts any
rent increases. So if you are not planning to renew an apartment rental
in Colombia, make sure to send written notice of termination at least
three months before the lease end date
Note that tenancy law is enforced before the civil courts in
Colombia. Procedures are long, and the courts are saturated with an
enormous backlog of cases so I have heard landlords evicting a deadbeat
tenant can take a long time – up to a year or more.
Law 820 regulates the eviction process in Colombia, and procedural
rules are found in the Colombian Code of Civil Procedure. The eviction
process is called “Proceso de restituciĂłn de inmueble arrendado.”
The eviction process taking a long time in Colombia is another reason
real estate agents require fiadors for unfurnished apartment rentals.
Kitchen inside my current apartment
The Bottom Line
Rental laws in Colombia are fairly favorable to renters with rent
increases limited by law to inflation, and there are clearly defined
rules for terminating leases early.
Before you rent an unfurnished apartment in Colombia, make sure you
understand the above rental laws and information about apartment rental
contracts, so real estate agents or others do not mislead you.
If you want to rent an unfurnished apartment, most are leased through
Colombian real estate agents. Few agents speak much English, so some
Spanish is required.
Most agents will require a fiador (cosigner), but this can be avoided
by paying rent in advance as I have done for five years of unfurnished
apartment rentals in MedellĂn.
Some foreigners have had success in bypassing real estate agents and
searching for and renting directly from an owner and avoiding the fiador
requirement.
But this can be challenging and is a numbers game, it may be a 1 out
of 50 chance situation and severely limits your apartment choice. I
prefer to use my real estate agent, and I can rent most available
properties as there aren’t many exclusive listings in Colombia.
Another way to avoid the fiador requirement is to use an insurance company like
Mapfre.
But they will only rate your safety as a tenant by looking at any
economic activity you have inside Colombia, so you have to be
established in Colombia.
Unfortunately, the foreign-owned real estate firms in Colombia don’t
really provide rental services for unfurnished apartments to my
knowledge.
This is likely due to the commission for unfurnished apartment
rentals being fairly low (typically 8-10 percent of rent) and foreigners
requiring too much hand-holding.
Foreign-owned real estate agencies would rather deal with property
sales where the commissions are 3 percent of the selling price or deal
with rentals of furnished apartments that don’t fall under the rules for
unfurnished rentals.