COVID-19 Clause in a rental contract

On top of the long list of things that have changed with the pandemic, a new clause must be added to the issue of rental agreements. In recent months a new concept has emerged which is applied as a clause in rental contracts. It is known as the COVID-19 Clause.

But what exactly is it and how does it affect landlords and tenants?

First of all, we must point out that the rental contract is a document that is drawn up with the aim of protecting the interests of both landlords and tenants. This is always supported by the current legislation, which must be reflected in the contract.

COVID-19 has disrupted our lives in Mallorca, Menorca & Ibiza and made us rethink how to proceed if a state of emergency and confinement is declared again. This uncertainty has affected incomes as well as demographics and travel (i.e., students travelling to university cities will no longer rent rooms or apartments).

Due to this, many owners have decided to include a clause in their contracts specifying, with the agreement of both parties, what to do in the event of confinement. The clause has been called the COVID-19 clause.

What is the COVID-19 Clause?

The COVID-19 Clause has been created to protect both the tenant and the owner. In fact, it is the oral agreement that many people made in March and which would now be put in writing. The contract must specify all matters relating to moratoriums, price reductions, abandonment of the property and compensation to the landlord in the event of late payment.

The COVID-19 clause is designed for very specific profiles:

  • university students who have to move to another province
  • commercial premises that are no longer in operation due to compulsory closure
  • people on short term rental who are moving around for work
  • holiday rentals
  • foreigners who are forced to return to their country


What about long term rentals?

This clause is not entirely recommended for people renting for a long period because, according to Article 11 of the Rent Act, the contract can be cancelled before its expiration after a minimum of 6 months has passed since it was signed. In general, this is not a group, such as students, who have the option of returning to another home.

If the tenant has been dismissed or is in an ERTE or ERE situation, the government launched a series of measures in March to facilitate the payment of rent. This way, the tenant will be financially able to pay the rent without having to leave the home.

However, in many cases this clause is also being included so that an agreement can be reached between the parties without the need to resort to eviction for non-payment.



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