I was asked to give my opinion on the contract to be found at the following link. The document has been edited to remove personal details of the owner and tenant, and also the property identification details.
DISCLAIMER: This is my personal opinion. I am not a lawyer and I am not charging for this service.
Here follows the questions I was sent, and below each one follows my answer.
1. What are the current coefficients pertaining to “The rent can be updated annually, in accordance with the current updating coefficients;”
– legally, rentals can be increased by a yearly inflation coefficient calculated from August to August each year and published in the Autumn, normally in October. This year, the coefficient was 6.94%, meaning that this contract, after 1 year, can be updated by this percentage, as long as the government does not limit such increases by law to a lower figure, which is something they did this year. In any case, the increase has to be communicated to the tenant by registered letter 30 days before being applied.
2. Is a penalty of 20% standard for late rent? Not that we would be but it seems excessive
– Yes, this is according to Article 1041 of the Portuguese Civil Code and is normal. Note, however, that the payment has to be more than 8 working days late, which normally is more than enough for a tenant to make the payment, especially if an automatic bank transfer is scheduled for the 1st or 2nd day of the month.
3. Generally speaking under Portuguese law, is hanging paintings etc allowed or not.
– Yes, it is allowed, but the tenant should make sure that any damage to the walls, such as holes or chipped paint, is repaired before leaving the property. I would also make sure you get written agreement that it’s possible, just in case.
4. “Charges due to any breakdown of appliances, whose identification is listed in Annex I, shall be borne by the Tenant Party, and it must be carried out in an establishment representing the respective brand” and “If there is a replacement for new equipment, it must be communicated and subject to the Landlord Party’s acceptance. “ Does this mean we are responsible for paying repairs on items that are not ours?
– You are responsible for repairs and maintenance when it is your fault. The contract includes the phrase “except for the wearing caused from its normal and prudent use” in (not great) English and “excetuando o desgaste proveniente da sua normal e prudente utilização” in Portuguese, which is the correct way to do this.
5. Is it generally possible to agree to rent increases in advance, I would prefer the certainty of knowing what it was yearly?
– As mentioned above, the contract and the law both allow for yearly increases according to the coefficient defined by INE every year, and which should be notified to you by registered letter at least 30 days before the increase is applied, and only after at least one year.
6. At the end of 3 years, does the lease renew automatically, or can the landlord terminate it
– The landlord can oppose the renovation after three years, but must do so at least 120 days in advance by registered letter. If he doesn’t, then it renews automatically
7. I am aware of the previous rent for this apartment as I know the individual leasing it, is there a limit to the increase of rent from one tenancy to another new tenancy
– Yes, there is a 2% limit on the increase in the price, compared to the previous rental registered in the last 5 years. There are some exceptions, which can be seen at this link.
As a general comment, I believe that this contract is excellent, in that it covers almost all possible situations and is written absolutely according to the law.