The initiative, promoted by Congressman Roberto Kamiche, establishes that The landlord may ask the tenant for an amount of up to three months’ rent, in money, to cover possible debts, unpaid services or damages to the property, which must be returned at the end of the contract if there are no outstanding ones..
According to specialists, currently the law does not specifically regulate this figure within the lease, so the amount, use and conditions of what is known in the market as a warranty depend on what the parties agree to.
Specifically, the rental deposit proposed by the legislative initiative is similar to the guarantee figure that is usually currently established in a rental contract. The text establishes a “deposit” that reaches a maximum of up to three months of agreed rent, and defines the cases in which this amount can be used, such as debts, unpaid services or damage to the property.
From a legal point of view, specialists warn that this figure does not coincide with the traditional definition of bail in the Civil Code, which implies the participation of a third party, which opens a debate about its application in this type of contracts.
Luis Aliaga, principal associate of Philippi, Prietocarrizosa, Ferrero DU & Uría (PPU), explained that the proposal does not coincide with the traditional definition of bail in the Civil Code. “This difference can generate some conceptual confusion and raises doubts about whether the place chosen within the Civil Code is the most appropriate to regulate this type of guarantee,” he indicated.
The main problem in rentals is not the guarantee, but the difficulty in recovering the property in the event of default, due to long and ineffective eviction processes. Photo: Andina/ Reference.
Along the same lines, Alejandro Fuller, principal associate of Payet, Rey, Cauvi, Pérez, considered that the project starts from the wrong foundation. “The project makes a conceptual error by assuming that the bond and the guarantee mechanisms used in lease contracts are the same,” he said.
The specialist specified that the deposit implies the participation of a third party, while in rentals it is usual for the tenant himself to provide a sum of money as support. He added that, in practice, both figures can coexist in the same contract, which reinforces the need to distinguish them correctly to avoid ambiguities in their application.
Beyond the term, specialists warn that the initiative could change the way contracts are negotiated today.
READ HERE: A new test for Peru’s economic resilience
Aliaga noted that the proposal introduces rules that are currently freely defined between the parties, which could reduce that margin for negotiation. Fuller agreed on that point and cautioned that setting rigid limits may not be appropriate in all cases. “These unnecessary limits that the legislator seeks to implement reduce the dynamism and competitiveness of the real estate market,” he stated.
For Yuri Vega, main partner of Estudio Muñiz, Olaya, Meléndez, Castro, Ono & Herrera, the initiative does not introduce a substantial change, since the parties can already agree on this type of guarantees. “If you can already do it today, then this initiative is unnecessary,” he said. Along these lines, he considered that the standard does not establish an additional mandatory requirement, but rather regulates an existing practice, although with limits that could alter its use in the market.
Vega questioned the usefulness of the initiative, considering that it does not introduce substantial changes. “It’s one of the most useless bills I’ve ever seen,” he said. In his opinion, the problem does not lie in the absence of regulation, but in other aspects of the system, such as the difficulty in recovering a property in the event of non-compliance.
Vega added that the real problem is not in the lack of regulation of these guarantees, but in the difficulty of enforcing the contracts. Along these lines, he indicated that the discussion should focus on more effective mechanisms to recover properties in the event of non-compliance, instead of establishing new rules on an aspect that already works in the market. He pointed out that eviction processes continue to be long and ineffective, which ends up affecting the dynamics of the rental market.
