Commentary on Judgement 787/2020 of 4 November by Section 13 of the Provincial Appellate Court of Barcelona.
This judgment, which establishes very important criteria when interpreting lease agreements, arises from proceedings in which the claimant party demands payment of a certain sum of money from the defendant for damage existing in the leased property at the time of its return.
To this end, the claimant directs her action not only against the two tenants of the property, but also against their joint and several guarantor.
When resolving the conflict, the Provincial Court establishes several highly important criteria, which can be summarised as follows:
First of all, the Provincial Court recalls the tenant's obligation to return the rented dwelling or premises to the landlord upon termination of the lease «in the condition in which they received it, except for what may have perished or been impaired by time or by unavoidable cause».
Furthermore, a dual *iuris tantum* presumption is established (that is to say, presumptions that can be rebutted by contrary evidence): on the one hand, the property or premises are presumed to have been received by the tenant in good condition at the start of the tenancy; and, on the other hand, the tenant shall be presumed to be at fault in the event of deterioration. The burden of proof to the contrary in order to rebut both presumptions shall lie with the tenant.
An important detail at this point lies in the definition of “receiving in good condition”, which does not mean receiving the property as “new”, but rather in the same condition as when it was received, with certain deterioration due to liveability over time or unavoidable causes being accepted, pursuant to articles 1,562, 1,563 and 1,564 of the Civil Code.
Everything clarified by the Provincial Court in this Judgment is understood, however, without prejudice to that agreed between the parties, who may establish by mutual agreement whatever they deem appropriate in the clauses of the contract.
The Provincial Court also recalls the criterion followed by the Supreme Court when establishing compensation in the event of damage:
«It is reasonable to take into consideration the concurrent circumstances of the damaged property in order to reduce the compensation, on grounds of fairness and to prevent unjust enrichment, considering as such the age of the property (...) or other similar aspects that diminish its value.
This criterion aims to limit the cost of compensation, inasmuch as factors such as the age and condition of the leased property or premises must be assessed in order to limit such compensation.
Lastly, and in what we consider to be the most innovative and important criterion (and, perhaps, the most legal-technical one) upheld by the Provincial Court of Barcelona, lies its perspective regarding joint and several guarantees in favour of a third party who is not a tenant, and their potential lack of passive standing (that is, the impossibility of being sued in the proceedings).
Thus, the Judgment, in order to check whether the liability of the joint and several guarantor can be extended to the subject matter of the proceedings (that is, the compensation for damage caused by the fault of the lessee), and therefore be considered a co-defendant, states that it is a commonly accepted doctrine that a surety is not presumed, in accordance with Article 1,827 of the Civil Code, but must be express and cannot be extended beyond what is contained therein.
Thus, in order to verify the scope of the said surety, the Provincial Court establishes the obligation to resort to that agreed between the parties (by virtue of articles 1,091 and 1,255 of the Civil Code), both as regards the contractual duration and the suretyship clause, it being established doctrine that «in order to investigate the intention of the parties, the entirety of the contract must be taken into account, and not a clause isolated from the others».
Likewise, according to commonly accepted doctrine, it is established that the guarantee clause must be interpreted restrictively, for the benefit of the debtor, as a principle and general rule in the interpretation of contracts.
It is worth noting that, in the tenancy agreement subject to the proceedings, one of the co-defendants was established as a joint and several guarantor in the following terms: “they act (…) as a personal guarantor on a joint and several basis and guarantee for all intents and purposes the tenants under the tenancy agreement (…) taking responsibility for any non-payment that may occur”.
In the opinion of the Provincial High Court, the aforementioned clause does not expressly extend to the fulfilment of all obligations, but only to monetary ones, and to extend this liability to a non-monetary obligation (such as, certainly, the obligation to maintain and return the rented dwelling or premises in the same state in which it was received) would infringe the principle of restrictive interpretation of surety in favour of the debtor, set out above.
Therefore, the Provincial High Court considers that liability cannot be extended to the joint and several guarantor in this case.
At BUSQUETS, in the lease agreements we draft, we always recommend expressly detailing the obligations of the parties (lessor, lessee and any joint and several guarantors), in order to avoid what happens in this scenario: that, by failing to correctly provide for the extent of the other party's responsibilities, the lessor may find themselves at a disadvantage in the event of a potential default by the debtors, being unable to claim the fulfilment of non-monetary obligations from the joint and several guarantor, whose liability would have been extended had the contract clause been correctly drafted.