A well-drafted rental contract is the difference between a smooth landlord-tenant relationship and months or years of grief. In the Canary Islands, where the rental market is experiencing a period of high demand, many landlords make the mistake of using generic contracts downloaded from the internet that fail to cover the most contentious situations.

In this guide we review the 10 clauses that must not be missing from your rental contract in the Canary Islands, the most common mistakes and when it is worth calling in a lawyer.

First things first: the legal basis

All primary residence rental contracts in Spain are governed by the LAU (Ley de Arrendamientos Urbanos — Spain’s Urban Tenancy Act), currently in its 2019 reformed version. Some key points every Canarian landlord should know:

The minimum duration of the contract is 5 years if the landlord is a natural person, and 7 years if it is a legal entity (company).
The tenant has the right to annual extensions until the minimum duration is reached, unless they communicate their wish not to renew at least 30 days in advance.
The mandatory legal deposit is one month’s rent for a primary residence.
Estate agency fees and contract formalisation costs are borne by the landlord when the landlord is a legal entity.

That said, the LAU sets a general framework but allows the parties to agree on many specific conditions. That is where a well-drafted contract becomes critical.

The 10 essential clauses

1. Full identification of the parties and the property

It seems obvious, but a surprising number of contracts have incomplete details. Your contract must include:

Full name, DNI/NIE (national or foreign ID) and tax address of both landlord and tenant.
Exact address of the property, including floor, door number and cadastral reference.
Title deed or property registry extract confirming that the landlord is the legitimate owner.

If there are multiple owners (for example, an inherited flat), all must be named and sign, or delegate via notarised power of attorney.

2. Monthly rent, payment method and annual adjustment

Define precisely:

The exact monthly rent amount.
The payment deadline (for example, within the first 5 days of each month).
The payment method: bank transfer, direct debit, etc. Avoid cash payments, as they leave no documentary trail.
The annual adjustment mechanism. Since the 2024 reform, the annual rent update cannot exceed the index published by the INE (National Statistics Institute) for this purpose. Specify in the contract that the rent will be updated in line with the reference index in force at any given time.

Do not leave the adjustment to chance. If you do not include an adjustment clause, you will be unable to increase the rent for the entire duration of the contract.

3. Deposit and additional guarantees

The LAU requires a deposit equivalent to one month’s rent. In the Canary Islands, this deposit must be lodged with the corresponding body of the Canary Islands Government.

In addition to the statutory deposit, you may agree additional guarantees: an extra deposit (typically one or two additional months’ rent), a bank guarantee or a rent protection insurance policy. The LAU limits these additional guarantees to a maximum of two months’ rent when the contract is for a primary residence.

In the contract, clearly specify the conditions for returning the deposit: deadlines, criteria for possible deductions and the procedure if there are disagreements.

4. Duration, extensions and start date

Set out clearly:

The exact start date of the contract.
The agreed duration (for example, one year).
The automatic extensions up to 5 years (or 7 if the landlord is a legal entity), in accordance with the LAU.
What happens upon reaching the 5 or 7-year mark: tacit annual extensions for up to 3 additional years, unless either party communicates their intention not to renew with the legally required notice.

5. Allocation of maintenance responsibilities

This is one of the points that generates the most disputes. The LAU establishes a general rule: the landlord is responsible for repairs necessary to keep the dwelling habitable (plumbing, electrics, structure), and the tenant is responsible for wear and tear from ordinary use (light bulbs, minor breakdowns, cleaning).

In the contract, flesh out this rule with practical examples:

Who pays if the water heater breaks? Normally the landlord, unless it was caused by misuse.
Who covers air conditioning maintenance? It is worth specifying.
What is the procedure for reporting a breakdown? Define a maximum period for the tenant to report the issue and another for the landlord to resolve it.

The more specific you are, the less room for argument.

6. Subletting and assignment clause

The LAU permits partial subletting of the dwelling unless the contract expressly prohibits it. Bear in mind that room-by-room rental has its own regulatory framework — you can learn more in our guide to room rental legislation in the Canary Islands. If you do not want your tenant subletting rooms or assigning the flat to third parties, you must include an explicit prohibition clause.

Draft it clearly: “The total or partial subletting of the dwelling, as well as the assignment of this contract to third parties, is expressly prohibited without the prior written consent of the landlord.”

7. Late payment penalties and procedure

Set out what happens when the tenant is late with payment:

Late payment interest applicable after a certain number of days (for example, the statutory interest rate plus two percentage points).
The number of unpaid monthly payments that constitute grounds for contract termination.
Procedure: formal written communication before initiating any legal action.

This clause will not prevent non-payment, but it protects you legally and speeds up any subsequent court proceedings. If you find yourself in that situation, we recommend our guide on what to do when a tenant is not paying rent in the Canary Islands.

8. Detailed inventory with photographs

The inventory is a contract annex that many landlords forget or do superficially. A good inventory should include:

A detailed list of all furniture, appliances and fittings delivered with the property.
The condition of each item: new, good condition, normal wear, etc.
Dated photographs of each room and the main items.
Meter readings for water, electricity and gas at the time of handover.

Both parties must sign the inventory. At the end of the contract, this document will be the reference for determining whether there is damage beyond natural wear and tear and whether part of the deposit may be retained.

9. Early termination of the contract

The LAU allows the tenant to withdraw from the contract after 6 months, with 30 days’ notice. The landlord may agree on compensation for early withdrawal equivalent to one month’s rent for each remaining year of the contract (pro rata for part of a year).

For the landlord, early termination is only possible in the circumstances specified by law: need for the dwelling for personal use or for use by first-degree relatives, and only after at least one year from the signing date.

Include these scenarios in the contract, with the deadlines and conditions established by the LAU, so that both parties are clear on the rules.

10. House rules and permitted use of the dwelling

Close the contract with a clause establishing basic rules of use:

Obligation to comply with the homeowner association’s by-laws.
Pet policy: permitted, prohibited or permitted under certain conditions.
Prohibition of nuisance, unhygienic, harmful or dangerous activities.
Restrictions on works or alterations to the property without the landlord’s prior written consent.
Exclusive use as a primary residence (to prevent the property being used for tourist or professional activities without your knowledge).

Common mistakes in rental contracts

These are the errors we see most frequently in rental contracts in the Canary Islands:

Using a template without adapting it. Generic models from the internet may serve as a starting point, but never as a final contract. Every situation is different and the contract must reflect the specifics of your flat, your tenant and your conditions.

Not specifying who pays each utility. Electricity, water, gas, internet, community fees, IBI (local property tax), rubbish collection charge. If you do not detail this, there will be disputes. The standard practice in the Canary Islands is for the tenant to pay consumption utilities (electricity, water, gas, internet) and the landlord to cover the community fees and IBI. But it must be in writing.

Not including the inventory. Without a signed inventory, you cannot prove the initial condition of the flat or retain the deposit for damage.

Not registering the deposit. In the Canary Islands, the deposit must be lodged with the relevant public body. Failing to do so is an infringement and leaves you in a weak position in any claim.

Incorrect notice periods. Make sure the notice periods in your contract match those established by the LAU. A contractual notice period shorter than the statutory one has no legal validity.

When to call in a lawyer

The short answer: whenever you can. A lawyer specialising in tenancies can review or draft your contract for 200-400 euros. Compared to the cost of a legal dispute, it is a minimal investment.

Consult a lawyer without fail if:

The flat has multiple owners or is part of an unresolved estate.
The tenant is a company or legal entity.
You want to include special clauses (tenant-funded renovations in exchange for reduced rent, for example).
You are renting to a family member (this has specific tax implications).
You have doubts about any legal aspect of the contract.

The peace of mind of not having to worry about the contract

A solid contract protects you, but it does not free you from managing it. Every renewal, every incident, every rent adjustment is a task that requires attention and legal knowledge.

The rent-to-rent model offers an alternative: you sign a single contract with a professional company that guarantees you a fixed monthly income and handles all the contracts with tenants, the selection process, incidents and maintenance. Your relationship is with the company, not with multiple tenants.

If you prefer to simplify as much as possible and eliminate the administrative burden of renting, request a no-obligation valuation for your flat in the Canary Islands. Sometimes, the best clause is the one you never have to draft.

Rental Contract in the Canary Islands: 10 Clauses You Cannot Afford to Miss