What does selling a property with a subsequent tenancy involve?

The transaction whereby you sell your property and continue residing in it as a tenant is technically known as a sale & leaseback or sale with subsequent lease. It is a solution used by individuals who require immediate liquidity without having to leave their primary residence.

In this process, two documents are signed simultaneously before a notary: the public deed of sale and the tenancy agreement. From the moment of signing, the buyer becomes the landlord and you become the tenant, assuming the corresponding rights and obligations under current legislation.

Legal protection: can I be evicted if I sell my home and stay on as a tenant?

If you are wondering whether you can be evicted if you sell your home and stay on as a tenant, you should know that the Urban Tenancies Act protects the tenant by guaranteeing a minimum duration for the agreement. If the buyer is an individual, the agreement is automatically renewed year by year up to a minimum of five years. If the buyer is a corporate entity, the minimum mandatory renewal period rises to seven years.

During this minimum legal period, the new owner cannot terminate the agreement unilaterally except in specific circumstances regulated by the law itself. Therefore, your stay is legally protected as long as you keep up with your contractual obligations.

Reasons why the new owner can lawfully evict you

Despite the existing legal protection, there are well-defined circumstances under which you could be required to vacate the property:

• Non-payment of rent or utility bills: Failure to pay agreed amounts entitles the landlord to file an eviction claim for non-payment.
• Need for the property for personal or family use: Under Article 9.3 of the LAU, after the first year of the agreement, an individual landlord may terminate the tenancy if they require the property for themselves, their first-degree relatives, or their spouse following a final judgment of separation, divorce, or annulment. For this to be valid, this possibility must be expressly stated in the initial agreement.
• Expiry of the contract or its extensions: Once the five or seven years prescribed by law (or a longer agreed period) have elapsed, the owner can serve notice of non-renewal giving the required statutory advance notice.
• Breach of contract clauses: Carrying out unauthorised works, causing serious damage to the property, or engaging in annoying or unhealthy activities are sufficient grounds to terminate the agreement.
• Unauthorised subletting: Subletting the property in whole or in part to third parties without the landlord's express permission is a legal ground for contract termination.

How to draft the contract to avoid an unexpected eviction

To maximise your security when carrying out this transaction, it is essential to negotiate and carefully draft the terms of the tenancy agreement before signing the sale:

1. Agree on lease terms longer than the statutory minimum: It is possible to agree terms of ten or more years. A long term guarantees medium- and long-term stability.
2. Express waiver of Article 9.3 of the LAU: You can negotiate for the landlord to expressly waive the right to reclaim the property for personal or family need during the term of the contract.
3. Clear setting of rent and review mechanisms: Clearly specify how the rent will be reviewed annually to prevent disproportionate increases that might stop you from paying the rent.
4. Registration of the agreement with the Land Registry: Although not compulsory, registering the tenancy agreement protects your tenant rights against future buyers of the property.

Key aspects if dealing with Official Protection Housing (VPO) in the Comunidad de Madrid

If the property you intend to sell and remain in as a tenant is Official Protection Housing (VPO) located in the Comunidad de Madrid, there are specific regional regulations that you must strictly comply with:

• Maximum sale price and rent caps: The Comunidad de Madrid sets limits per usable square metre for both the sale price and the maximum rent. Free market prices cannot be set while the housing retains its protected status.
• Rights of pre-emption and first refusal: The regional administration of Madrid usually holds pre-emptive acquisition rights, so notice of the intention to sell must be given before transferring ownership.
• Administrative authorization: To use a VPO as a rental property in the Comunidad de Madrid, it is essential to request the relevant formal prior authorization and meet the requirements set by regional housing regulations.

Do you need advice or financing after the sale?

Selling your property to stay on as a tenant is a major financial transaction that often goes hand in hand with looking for new investment opportunities or restructuring your assets. Having professional advice ensures that both the sale and the subsequent lease are carried out with full legal certainty.

If you are considering this option or looking to reorganise your finances after the transaction, we recommend consulting qualified mortgage credit intermediaries to analyze the best financial options tailored to your needs.

Frequently asked questions about renting after selling

What happens if the new owner sells the home to someone else?

If the new owner decides to transfer the property to a third party during the term of the agreement, the new purchaser steps into the landlord's rights and obligations, and must fully respect your tenancy agreement until the legal or agreed period ends.

Could I lose the right to stay as a tenant if the property is foreclosed?

In the event of mortgage foreclosure or seizure of the property, legislation dictates that tenancy agreements may be terminated, unless the lease agreement was registered with the Land Registry prior to the seizure or mortgage creation.