• Commercial leases

Commercial leases are governed by the Civil and the Commercial Code. The Commercial Code provides special provisions to protect a tenant who has occupied real estate with a commercial establishment for at least two years. The protection consists of the right the tenant has to renew the lease (a few exceptions are made such as contractual breach of the tenant, or the landlord needing the property to install a different commercial establishment, or the need to perform necessary repairs).

• Residential leases

Residential leases are regulated by the Residential Lease Statute. According to this statute, there are restrictions for yearly basis rent increases made by the landlord. In case parties do not agree otherwise, the lease agreement will last for a one-year term, which will automatically be extended for successive one-year terms.

Lease provisions are generally freely negotiable. However, Colombian law does provide certain restrictions to such freedom regarding certain minimums that must be complied with despite the agreement of the parties to the contrary. For instance, restrictions apply regarding increases of the rent for residential leases, as well as regarding the causes to terminate commercial leases as explained in “What are the usual forms of leases?”.

There is not a maximum term for leases. Parties are free to set forth the extension conditions of the agreement as they please.

For residential leases, one-year terms; for commercial leases, between two- to five-year terms. The term is usually agreed to be automatically extended unless prior termination notice is given.

In commercial leases, the tenant has the right to renew the lease when it has occupied the leased property with the same commercial establishment for at least two years and the landlord does not have a just cause, according to Article 518 of the Code of Commerce, to terminate the lease.

Lease agreements can generally be terminated under the following circumstances:

• Upon the expiration of the lease term (does not apply for commercial leases when the tenant has occupied a property for at least two years with the same commercial establishment)
• When there is a need to repair or demolish the property
• When the tenant’s use of the property is different from that agreed on in the contract
• Upon the extinction of the landlord’s right to lease (unless the lease was executed by means of a public deed and registered in the public registry office)
• Upon the destruction of the leased property
• If the landlord needs the property for their own residence or to establish a substantially different business of the tenant
• When parties fail to comply with their obligations under the lease according to legal and contractual provisions

Yes. Although it is possible to agree on rent in a foreign currency, the payment of the rent must be made in local currency (Colombian pesos) at the exchange rate of the date of payment, or of the date agreed by the parties.

Rent is usually paid on a monthly basis and in advance within the first five to 10 days of the month. However, the parties are free to agree otherwise.

Regarding rural properties, rent is usually paid on a yearly basis.

Yes. In residential leases, the increase of rent cannot exceed the Consumer’s Index Price (IPC) of the previous year, nor the commercial value of the property.

In commercial leases, there are no legal limits for rent increases. However, the applied rate is usually the IPC, sometimes increased by one or two points.

The landlord’s main obligations are as follows:

• Maintain the property in a way that it can be used for the purpose of the agreement
• Protect the tenant from third parties who may disturb their tenancy
• Pay for necessary repairs

The following are the tenant’s main obligations:

• Use the property according to the agreement and preserve it
• Pay the rent on time
• Pay for public utilities
• Pay for ordinary repairs

Generally, tenants are not allowed to sublet the property, unless previously authorized by the landlord.

Regarding commercial leases, tenants can sublet without prior authorization up to 50% of the leased premises, as long as, with the sublease, the tenant does not give a different use of the property in a way that affects the landlord.

If the premises are destroyed, the lease is terminated. In this event, the tenant must prove that the destruction did not occur due to their behavior, or else, will be liable for such destruction.

In a lease agreement, none of the parties are usually obligated to insure the premises. However, the landlord may require the tenant to insure the leased premises.

As a general rule, when the owner sells the leased premises, the right as landlord disappears, and thus the lease agreement will be terminated unless: (i) the lease has been executed by public deed and such public deed has been duly registered by the Land Registrar; or (ii) the new owner accepts the assignment of the lease agreement.

If the premises are not sold but transferred without any consideration (e.g., donation, inheritance, etc.), the new owner will be obligated to maintain the lease agreement.

No. Unless the lease agreement has been executed by public deed duly registered in the public registry office.

If the foreclosure is due to a mortgage, the lease agreement will only survive if the registration of the lease agreement executed by public deed is prior to the registration of the mortgage.