The President of the Nation signed Decree of Necessity and Urgency No. 70 (the “DNU”), which amends certain aspects of the regulations applicable to lease contracts, particularly repealing Law No. 27,551 and modifying certain Sections of the Civil and Commercial Code of the Nation (“CCCN”).

The DNU does not contain a provision declaring its effective date. Therefore, given its publication date, its provisions are to be understood to take effect on the eighth (8) day after publication, which is December 29, 2023 (Section 5 of the CCCN).

Among the main changes in real estate leasing matters, the following are highlighted:

1-Section 1198: The legal minimum lease terms applicable to real estate leases are eliminated. Starting from the DNU’s effective date, lease contracts for real estate, regardless of their purpose (residential or otherwise), may have a duration agreed upon by the parties.

In case no term is specified in the contract, the default term of the CCCN will apply, which is two (2) years for permanent housing with or without furniture, three (3) years for other purposes, and for temporary leases, the term established by local customs where the leased property is located.

2-Section 1199: It is expressly provided that rents can be set in legal currency (pesos) or foreign currency (dollars, euros, etc.). If the price is set in foreign currency, the tenant cannot demand that payment be accepted in a different currency (e.g., pesos).

The parties are free to agree on any rent adjustment index. The regulation states that if the index chosen by the parties ceases to be published, then the official index with similar characteristics to the one chosen by the parties published by INDEC will apply. In the case of a lease with a price in foreign currency, if the chosen index ceases to be published, the official index with similar characteristics that serves the same purpose in the country that issues the agreed-upon payment currency will apply.

3-Section 1221: The tenant may unilaterally terminate the contract at any time, without notice or a minimum term having elapsed, by paying 10% of the future rent balance, i.e., 10% of what remains of the contract, calculated from the notification date until the agreed-upon end date in the contract.

It is debatable whether (i) the tenant’s right to unilaterally terminate is waivable and/or (ii) whether the 10% penalty or indemnification established by the Section can be increased by mutual agreement. In the case of contracts negotiated on equal terms, we understand that there could be sufficient arguments to support such agreements. However, in the case of contracts for housing or consumer contracts, clauses of that nature could be considered abusive and therefore not agreed upon.

4-Section 1196: The parties may freely agree on the payment frequency, which shall not be less than one month. This means that advance payments for future lease periods freely agreed upon by the co-contractors (e.g., 6 months, 1 year, etc.) may be agreed upon.

The parties may also freely agree on the amounts and currencies to be provided as security deposit and security deposit.

Additionally, the following Sections of the Civil and Commercial Code are REPEALED:

5-Section 1202. Payment for Improvements. The landlord must pay for necessary improvements made by the tenant to the leased property, even if it was not agreed upon, if the contract is terminated without the tenant’s fault, except in cases of destruction of the property.

6-Section 1204 – Loss of Brightness in the Property. The loss of natural light in the urban property due to constructions on neighboring plots does not authorize the tenant to request a reduction in rent or terminate the contract unless there is deceit on the part of the landlord.

7-Section 1204 bis – Compensation. Expenses and claims that are the responsibility of the landlord under the provisions of this Section may be offset by the tenant against the rent payments as of right, provided that the tenant notifies the landlord in writing of the details.

8-Section 1221 bis – Renewal of the Contract. In contracts for properties intended for housing, within the last three (3) months of the lease relationship, either party may summon the other, by serving a written notice, to negotiate the renewal of the contract, within a period not exceeding fifteen (15) consecutive days. In the event of the landlord’s silence or refusal to reach an agreement, upon proper notification, the tenant may terminate the contract prematurely without paying the corresponding indemnification.