This is a guest post by an American expat living in Cuenca since 2007.
Update (October 8, 2012): Here is a link to Ecuador’s Tenancy Act / Ley de Inquilinato Ecuador. It is in Spanish and in pdf format. To find more references, just google “ecuador ley de inquilinato”. A reader suggested that the content of this post was based on hearsay and bad advice from lawyers. The government act is public information and everyone can read it themselves. Enjoy! (Update by Bryan Haines)
For expats, renting a house or an apartment has its advantages. A renter does not have to worry about making repairs or paying for expenses such as insurance, property taxes, maintenance, etc. A renter has the freedom to move should the neighborhood change or if undesirable neighbors move in next door. For many expats, renting is the way to go.
However, there are some unpleasant disadvantages to renting. One problem that renters may encounter, especially expat renters, is the tendency that some landlords have of unjustly inflating the rent.
We recently faced this situation. Last year we found a decent house for rent at a reasonable price. We were hoping to stay in the house for at least 2 or 3 years and we were aware that the landlord may try to implement a modest increase in the rent during that period of time. When the contract expired, the landlord paid us a friendly visit and asked if we wanted to renew the rental contract. “Yes“, we replied, “we would like to continue renting this house.”
Then the landlord dropped a bomb on us.
There would be a rather large increase in the rent. The new monthly rental price would increase from $260.00 to $350.00 per month (a 35% increase in the rent). I explained to the landlord that we live on a fixed income and that we could not afford such a steep increase. Keep in mind that the owners of that house had done nothing to improve the appearance or condition of the property during the year we lived there. In fact, we had made several repairs/improvements to the house at our own expense. Also, we had always paid our rent on time and had never caused the owners any trouble.
Taking into consideration these facts, I asked the landlord how he could justify such a large increase in the rent. His blatant response: “We want more money”.
Realizing that this particular landlord was only interested in sucking more money out of “rich, gullible gringos”, we decided to move and quickly found a newer, larger (and less expensive) house in a nice neighborhood. Our bad experience with the greedy landlord caused us quite a bit of anxiety and prompted us to look into the rental laws in Ecuador. What we learned was very interesting.
We were surprised to find that the rental law in Ecuador highly favors renters and includes many clauses that protect the rights of those who live in rental property. Here are a few examples of the clauses that favor renters:
Ecuador’s Rental Laws
- Although many landlords only offer a one year contract, under the law a renter has the right to ask for a two year rental contract should he so desire. During the contract period the land lord cannot raise the rent. If the landlord attempts to raise the rent, the renter can appeal to the Juez de Inquilinato (the rental court judge) and the landlord will subject to a fine.
- The rental contract should be notarized. If a contract is not properly notarized, the landlord cannot take any legal action against a renter. The only way a landlord can sue to have a renter removed from the property is to present to the court a notarized rental contract along with proof that the rental property has been registered with the municipality.
- A landlord has to give the renter at least 3 months notice before terminating a contract. The renter has to give the landlord a one month notice before breaking the contract. In the case of early termination, a landlord may try to force a tenant to pay for the remaining months left on the contract, but the rental law does not obligate a renter to pay an early termination fee.
- The municipality sets the maximum rent that a landlord can charge. The rent is based on a formula that takes into consideration the value and condition of the property. In order to raise the rent, the landlord has to submit a petition to the judge that has jurisdiction over rentals. The landlord has to justify before the court his reasons for asking for an increase in rent. A landlord cannot just raise the rent because he wants more money. Although many landlords attempt to implement a yearly rent increase, the rental law does not permit automatic yearly increases.
As the above examples show, the rental laws in Ecuador are designed to protect renters from abuses. We have rented 6 houses since living in Ecuador and are pleased to say that, with the exception of the previously mentioned owner who tried to raise our rent by $90.00, all of our land lords have treated us fairly and we have no complaints. Still, it is good to be familiar with the rental laws when entering into contracts and renting a house in Ecuador. Knowing that the law is on our side, gives renters like us a sense of peace and reduces the feeling of helplessness in the event of an abusive landlord.