LAW 820 OF 2003

(July 10)

which establishes the urban housing leasing regime and other provisions.

THE CONGRESS OF COLOMBIA

DECREES:

CHAPTER I

General Provisions

Article 1. Object. The purpose of this law is to establish the criteria to be used as a basis for regulating leasing contracts for urban real estate used for housing, in order to develop the rights of Colombians to decent housing and property with a social function.

Article 2. Definition. The urban housing lease contract is a contract by which two parties reciprocally bind themselves, one to grant the use of an urban property intended for housing, totally or partially, and the other to pay a determined price for this use.

a) Related services, things or uses. Related services, things or uses are understood to be the domiciliary public services and all other services inherent to the enjoyment of the property and the satisfaction of the needs inherent to the habitation thereof;

b) Additional services, things or uses. Additional services, things or uses are understood to be those provided by the lessor that are not inherent to the enjoyment of the property.

In the urban housing lease contract, the parties may agree on the inclusion or not of additional services, things or uses.

In no case, the price of the lease of additional services, things or uses may exceed fifty percent (50%) of the price of the lease of the respective property.

CHAPTER II

Formalities of the urban housing lease agreement

Article 3. Form of contract. The lease contract for urban housing may be verbal or written. In either case, the parties must agree on at least the following points:

a) Name and identification of the contracting parties;

b) Identification of the property that is the object of the contract;

c) Identification of the part of the property being leased, when applicable, as well as the areas and services shared with the other occupants of the property;

d) Price and form of payment;

e) List of related and additional services, things or uses;

f) Term of the contract;

g) Designation of the contracting party responsible for the payment of the utilities of the property covered by the contract.

Article 4. Classification. Urban housing leases are classified as follows, regardless of the stipulation in this respect:

a) Individual. Whenever one or more natural persons receive for their own shelter or that of their family, or that of third parties, in the case of legal persons, a property with or without additional services, things or uses;

b) Jointly owned. When two or more natural persons receive the enjoyment of a property or part of it and undertake jointly and severally to pay the price thereof;

c) Shared. When it concerns the enjoyment of a non-independent part of the property being leased, on which the enjoyment of the rest of the property or part thereof is shared with the lessor or with other lessees;

d) Pension. When it relates to part of a property that is not independent, and necessarily includes additional services, things or uses and is agreed for a term of less than one (1) year. In this case, the contract may be terminated before the expiration of the term by either party upon ten (10) days’ notice, without any indemnity.

Paragraph 1. Part of a property is understood to be any portion of the property that is not independent and that does not constitute a housing unit as defined by the rules governing horizontal or separate property.

Paragraph 2. The National Government shall regulate the particular conditions to which the leases referred to in subparagraphs (a), (b) and (c) above shall be subject. c) and d) of this article.

Article 5. Termination of the Contract. The term of the lease shall be as agreed upon by the parties. In the absence of express stipulation, it shall be understood for a term of one (1) year.

Article 6. Extension. The urban housing lease contract will be understood to be extended under the same conditions and for the same initial term, provided that each of the parties has complied with its obligations and that the lessee agrees to the rent adjustments authorized by this law.

CHAPTER III

Obligations of the parties

Article 7. Solidarity. The rights and obligations arising from the lease contract are joint and several, both between lessors and lessees. Consequently, the restitution of the property and the economic obligations derived from the contract may be demanded or fulfilled by all or any of the lessors from all or any of the lessees, or vice versa.

The lessors who have not sued and the lessees who have not been sued, may be taken into account as intervening parties in litisconsortia, under the terms of the third paragraph of Article 52 of the Code of Civil Procedure.

Article 8. Lessor’s obligations. The lessor’s obligations are as follows:

1. To deliver to the lessee on the agreed date, or at the time of the conclusion of the contract, the property given in lease in good condition of service, safety and sanitation and to place at his disposal the services, things or related uses and the additional ones agreed upon.

2. Maintain the services, things and related and additional uses in the property in good condition to serve the purpose agreed upon in the contract.

3. When the urban housing lease contract is in writing, the lessor must provide both the lessee and the co-signer, as the case may be, a copy thereof with original signatures.

This obligation must be satisfied within a maximum period of ten (10) days from the date of execution of the contract.

4. In the case of dwellings subject to the horizontal property regime, the lessor shall provide the lessee with a copy of the regulatory part of the same.

In the case of shared housing, the lessor is also obliged to maintain the areas or services of common use in proper working, safety and sanitary conditions and to carry out at his own expense the necessary repairs and replacements, when they are not attributable to the tenants, and to ensure the maintenance of the internal order of the dwelling;

5. The other obligations established for lessors in Chapter II, Title XXVI, Book 4 of the Civil Code.

Paragraph. Failure to comply with the third paragraph of this article shall be sanctioned, at the request of a party, by the competent authority, with fines equivalent to three (3) months’ rent.

Article 9. Obligations of the lessee. These are obligations of the lessee:

1. To pay the rental price within the term stipulated in the contract, at the leased property or at the agreed place.

2. To take care of the property and the things received in lease. In case of damages or deterioration other than those derived from normal use or the action of time and which are attributable to the misuse of the property or to its own fault, to carry out the necessary repairs or replacements in a timely manner and at its own expense.

3. To pay on time the services, things or related and additional uses, as well as the common expenses in the cases in which they are due, in accordance with what is established in the contract.

4. Comply with the rules enshrined in the condominium regulations and those issued by the government to protect the rights of all neighbors.

In the case of shared housing and boarding houses, the tenant is also obliged to take care of the areas and services of common use and to carry out, at his own expense, the necessary repairs or replacements, when they are attributable to his own fault or to that of his dependents, and

5. The other obligations established for lessees in Chapter III, Title XXVI, Book 4 of the Civil Code.

Article 10. Procedure for payment by extrajudicial consignment of the lease fee. When the lessor refuses to receive payment under the agreed conditions and at the agreed place, the following rules shall apply:

1. The lessee shall comply with its obligation by consigning the respective amounts in favor of the lessor in the entities authorized by the National Government, of the place where the property is located, within five (5) business days following the expiration of the term or period agreed upon in the lease contract.

When in the place where the property is located there is no entity authorized by the National Government, payment shall be made in the nearest place where such entity exists, maintaining the priority established by the Government.

2. The consignment shall be made in favor of the lessor or the person legally representing him, and the entity receiving the payment shall keep the original of the title, the value of which shall remain at the disposal of the lessor.

3. The entity that receives the consignment must issue and deliver to the consignee two (2) duplicates of the title: one for the lessor and the other for the lessee, which must be indicated on each duplicate.

At the time of making the consignment, the reason for the consignment, as well as the name of the lessee, the precise address of the property occupied and the name and address of the lessor or his representative, as the case may be, shall be recorded in the title to be drawn up.

4. The lessee shall give notice of the consignment made to the lessor or his representative, as the case may be, by means of a communication sent by means of the postal service authorized by the Ministry of Communications together with the duplicate of the corresponding title, within five (5) days following the consignment.

A simple copy of the communication and of the duplicate title must be collated and stamped by the postal service company. Failure to comply with this obligation on the part of the postal service company shall give rise to the penalties to which they are subject.

5. Failure to comply with the provisions herein shall cause the Lessee to be in default in the payment of the rental fee.

6. The authorized entity that has received the payment shall deliver to the lessor or his representative, the value consigned upon presentation of the title and the respective identification.

7. Subsequent consignments shall be made within the stipulated term, by means of the consignment referred to in this article or directly to the lessor, at the option of the lessee.

Article 11. Payment verification. The lessor or the person authorized to receive payment of the lease shall be obliged to issue a written voucher stating the date, amount and period to which the payment corresponds. In case of reluctance to issue the certificate, the lessee may request the intervention of the competent authority.

Article 12. Place to receive notifications. In every urban housing lease contract, lessors, lessees, co-debtors and guarantors must indicate in the contract the address where they will receive judicial and extrajudicial notifications directly or indirectly related to the lease contract.

The address provided shall retain full validity for all legal purposes, until the other party to the contract is informed of the change thereof, for which purpose the authorized postal service shall be used, and the provisions of the article regulating the procedure for payment by extrajudicial consignment shall be applicable as applicable. Lessors must inform all lessees, co-debtors or guarantors of the change of address, while the latter are only obliged to report the change to the lessors.

The persons referred to in the first paragraph of this article may not allege ineffectiveness or improper substantive or procedural notification. Underlined text declared INEXEQUIBLE by the Constitutional Court through Decision C-670 of 2004.

The knowledge that the other party has of any other address of residence or work, different from the one stated in the contract, cannot be alleged as nullity either.

In the event that no address is reported in the contract or at a later time, it will be presumed by law that the lessor must be notified at the place where he receives the payment of the rent and the lessees, co-debtors and guarantors at the address of the property that is the object of the contract, without it being possible to carry out summons under the terms of article 318 of the Code of Civil Procedure. Underlined text declared INEXEQUIBLE by the Constitutional Court through Decision C-731 of 2005.

Article 13. General obligation. In shared housing and boarding houses, compliance with the regulations on maintenance, conservation, use and internal order issued by the national government, and the complementary rules adopted by the respective association of neighbors, co-tenants or co-owners, as well as the Police Codes, will be mandatory for their inhabitants.

Article 14. Enforceability. The obligations to pay sums of money payable by either party shall be enforceable based on the lease agreement and in accordance with the provisions of the Civil Code and the Code of Civil Procedure. With respect to the debts owed by the lessee for unpaid public utilities or common expenses, the lessor may recover what has been paid against the lessee by executive action by presenting the invoices, vouchers or receipts of the corresponding companies duly cancelled and the statement made by the plaintiff under oath that such invoices were cancelled by him, which shall be deemed to have been rendered with the filing of the claim.

Article 15. Regulated by National Decree 3130 of 2003. Rules on domiciliary public services and others. When a property is leased, through a verbal or written contract, and the payment of public utilities corresponds to the lessee, the following procedure must be followed, so that the property leased is not subject to the payment of domiciliary public utilities:

1. At the time of entering into the contract, the lessor may require the lessee to provide guarantees or bonds in order to guarantee to each utility company the payment of the corresponding invoices.

The guarantee or deposit, in no case, may exceed the value of the public utilities corresponding to the fixed charge, the charge for connection contributions and the charge per unit of consumption, corresponding to two (2) consecutive billing periods, in accordance with the provisions of Article 18 of Law 689 of 2001.

The fixed charge per unit of consumption will be established by the average of the last three (3) billing periods, increased by fifty percent (50%).

2. Once the guarantees or deposits in favor of the respective domiciliary public utilities company have been provided, the lessor shall denounce to the respective company the existence of the lease contract and shall remit the guarantees or deposits constituted.

The lessor shall not be liable and his property shall cease to be subject to the payment of public utilities, as from the expiration of the billing period corresponding to that in which the termination of the contract is made and the guarantees or deposits constituted are remitted.

3. The lessor may refrain from complying with the obligations arising from the lease contract until the lessee delivers the guarantees or securities furnished. The lessor may terminate the lease contract as of right, if the lessee does not comply with this obligation within fifteen (15) business days from the date of execution of the contract.

4. Once the company has been notified and the billing period has expired, the tenant shall be solely and exclusively responsible for the payment of the utilities. In case of non-payment, the domiciliary public utilities company may enforce the guarantees or deposits constituted, and if these are not sufficient, it may take the necessary actions against the lessee.

5. At any time during the execution of the lease contract or upon its termination, the lessor, owner, lessee or possessor of the property may request the public utilities company to reconnect the services in the event that they have been suspended. From this moment on, whoever requests it will assume the obligation to pay for the service and the property will be assigned for such purposes, in the event that the lessor or owner requests it.

The existence of unpaid invoices for the rendering of public services during the term of termination of the lease contract shall not, in any case, be a reason for the company to refuse to reconnect, when such reconnection is requested under the terms of the preceding paragraph.

6. When the public utilities companies install a new service to a property, the value of the same will be the exclusive responsibility of the person requesting the service. In order to guarantee its payment, the utility company may directly demand the guarantees provided for in this article, unless the applicant is the same owner or possessor of the property, in which case the property shall be subject to payment. In this case, the utility shall determine the amount and form of such guarantees or deposits in accordance with the regulations issued under the terms of paragraph 1 of this article.

Paragraph 1. Within three (3) months following the enactment of this law, the National Government shall regulate the formats for the denunciation of the lease and its termination, the provision of guarantees or deposits, the corresponding procedure and the penalties for non-compliance with the provisions of this article.

Paragraph 2. The Superintendencia de Servicios Públicos Domiciliarios will ensure compliance with the above.

Paragraph 3. The rules on public utilities established in this article shall enter into force within one (1) year as from the enactment of this law, in order for the companies providing domiciliary public utilities to make the technical adjustments and investments required.

CHAPTER IV

Prohibition of guarantees and deposits

Article 16. Prohibition of deposits and security interests. In urban housing leases, cash deposits or other types of real bonds may not be required to guarantee compliance with the obligations assumed by the lessee under such leases.

Such guarantees may not be stipulated indirectly or through an intermediary, nor may they be agreed upon in documents other than the one in which the lease contract has been recorded, or be substituted by others under names different from those indicated in the preceding paragraph.

CHAPTER V

Sublease and assignment of the Contract

Article 17. Sublease and assignment. The lessee may not assign the lease or sublease, unless expressly authorized by the lessor.

In case of contravention, the lessor may terminate the lease and demand delivery of the property or enter into a new lease with the actual users, in which case the previous lease shall be terminated, in which case the lessee shall be notified in writing.

Paragraph. In the event of legal proceedings, when there is express authorization from the lessor to sublease, the sublessee may be taken into account as the lessee’s litisconsortia intervener, under the terms of the third paragraph of article 52 of the Code of Civil Procedure.

Where there is an assignment expressly authorized by the lessor, restitution and other obligations under the lease must be demanded by the lessor from the assignee.

When the assignment of the contract has not been notified to the lessor, the assignee shall not be considered within the process as a party or as a litisconsorcial intervener.

CHAPTER VI

Lease Rentals

Article 18. Lease rent. The monthly lease price shall be fixed by the parties in legal currency but may not exceed one percent (1%) of the commercial value of the property or of the part thereof to be leased.

The commercial estimate for the purposes of this article may not exceed the equivalent of two (2) times the current cadastral appraisal.

Article 19. Fixing the lease fee. The monthly price of the fee stipulated by the parties may be fixed in any currency or foreign currency, being paid in Colombian legal currency at the exchange rate representative of the market on the date on which the obligation was contracted, unless the parties have agreed on a different date or reference rate.

Article 20. Readjustment of the lease fee. Every twelve (12) months of execution of the contract at the same price, the lessor may increase the rent up to a proportion not exceeding one hundred percent (100%) of the increase in the consumer price index in the calendar year immediately preceding the year in which the rent is to be readjusted, provided that the new rent does not exceed the provisions of Article 18 of this law.

The lessor who chooses to increase the rental fee must inform the lessee of the amount of the increase and the date on which it will become effective, through the authorized postal service or by means of the personal notification mechanism expressly established in the contract, under penalty of being unenforceable against the lessee. The payment by the lessee of a readjustment of the fee shall not entitle him to request a reimbursement, alleging the lack of communication.

CHAPTER VII

Termination of the Lease

Article 21. Termination by mutual agreement. The parties, at any time, and by mutual agreement, may terminate the urban housing contract.

Article 22. Termination by the lessor. The following are grounds for the lessor to unilaterally request the termination of the lease:

1. Failure by the lessee to pay the rent and adjustments within the term stipulated in the contract.

2. The non-payment of public utilities, which causes the disconnection or loss of service, or the payment of common expenses when the tenant is responsible for their payment.

3. The total or partial sublease of the property, the assignment of the contract or of the enjoyment of the property or the change of use of the property by the lessee, without the express authorization of the lessor.

4. The repeated incursion of the tenant in actions that affect the tranquility of the neighbors, or the use of the property for criminal acts or that imply contraventions, duly proven before the police authority.

5. The making of improvements, changes or extensions to the property without the express authorization of the lessor or the total or partial destruction of the property or leased area by the lessee.

6. Violation by the lessee of the rules of the respective horizontal property regulations in the case of dwellings subject to this regime.

7. The Lessor may unilaterally terminate the lease during the extensions, upon prior written notice addressed to the Lessee through the authorized postal service, with a notice period of no less than three (3) months and the payment of an indemnity equivalent to the price of three (3) months’ rent.

Once these conditions have been met, the lessee shall be obliged to return the property.

8. The lessor may unilaterally terminate the lease contract at the expiration date of the initial term or its extensions by invoking any of the following special grounds for restitution, prior written notice to the lessee through the authorized postal service no less than three (3) months prior to said expiration date:

a) When the owner or possessor of the property needs to occupy it for his own habitation, for a term of not less than one (1) year;

b) When the property is to be demolished for new construction, or when it is required to be vacated in order to carry out independent works for its repair;

c) When it is to be delivered in compliance with the obligations arising from a sales contract;

d) The full willingness to terminate the contract, provided that the lease contract has been in force for at least four (4) years. The lessor shall indemnify the lessee with a sum equivalent to the price of one point five (1.5) months’ rent.

In the case of the causes foreseen in the following paragraphs a), b) and c), the lessor shall attach to the written notice the evidence of having provided a guarantee in cash, bank or granted by a legally recognized insurance company, in favor of the lessee for a value equivalent to six (6) months of the current lease price, to guarantee compliance with the cause invoked within the six (6) months following the date of restitution.

In the case of the cause foreseen in paragraph d), the payment of the indemnity shall be made through the same procedure established in Article 23 of this law.

In the absence of written proof of notice, the lease shall be deemed to be automatically renewed for a term equal to that initially agreed upon.

Article 23. Requirements for unilateral termination by the lessor by notice with indemnity. In order for the lessor to unilaterally terminate the lease in the event provided for in paragraph 7 of the preceding article, the lessor must comply with the following requirements:

a) Communicate through the authorized postal service to the lessee or its legal representative, with the advance notice provided therein, indicating the date for the termination of the contract and stating that the compensation provided by law will be paid;

b) Consign in favor of the lessee and to the order of the competent authority, the indemnity referred to in the preceding article of this law, within three (3) months prior to the date set for the unilateral termination of the contract. The consignment shall be made in the entities authorized by the National Government for such purpose and the competent authority shall provide a copy of the respective title to the lessee or shall send him a communication stating such circumstance, immediately it becomes aware of the same.

The value of the indemnity shall be based on the rent in effect on the date of notice;

c) At the time of consignment, the reasons for the consignment, as well as the name and precise address of the lessee or his representative, shall be recorded on the respective titles;

d) If the lessee complies with the obligation to deliver the property on the date indicated, the lessee will receive the payment of the indemnity, in accordance with the authorization issued by the competent authority.

Paragraph 1. In the event that the lessee does not surrender the property, the lessor shall be entitled to a refund of the compensation paid, without prejudice to the lessor’s right to initiate the corresponding process of restitution of the property.

Paragraph 2. If the lessor, with the acceptance of the lessee, desists from terminating the lease, he may request the competent authority to authorize the return of the sum deposited.

Article 24. Termination by the lessee. The lessee may unilaterally request the termination of the lease for the following reasons:

1. The suspension of the provision of public utilities to the property, by premeditated action of the lessor or because the lessor is in default in payments for which he is responsible. In such cases, the lessee may choose to assume the cost of reestablishing the service and deduct it from the payments to be made as lessee.

2. The repeated incursion of the lessor in behaviors that seriously affect the lessee’s full enjoyment of the leased property, duly proven before the police authority.

3. Ignorance on the part of the lessor of rights recognized to the lessee by law or contract.

4. The lessee may unilaterally terminate the lease contract within the initial term or during its extensions, prior written notice addressed to the lessor through the authorized postal service, with a notice period of no less than three (3) months and the payment of an indemnity equivalent to the price of three (3) months of lease.

Once these conditions have been met, the lessor shall be obliged to take delivery of the property; if he fails to do so, the lessee may make provisional delivery through the intervention of the competent authority, without prejudice to taking the corresponding legal action.

5. The lessee may unilaterally terminate the lease contract at the expiration date of the initial term or its extensions, provided that the lessee gives prior written notice to the lessor through the authorized postal service, no less than three (3) months prior to the expiration date. In this case the lessee shall not be obliged to invoke any reason other than his own free will, nor shall he be obliged to indemnify the lessor.

In the absence of written proof of notice, the lease shall be deemed to be automatically renewed for a term equal to that initially agreed upon.

Paragraph. For the purposes of the provisional delivery referred to in this article, the competent authority, at the written request of the lessee and once the lessee has accredited compliance with the conditions set forth therein, shall proceed to set a date and time for the delivery of the property.

Once the foregoing has been complied with, the lessor and the lessee shall be summoned by means of a communication sent by the authorized postal service, in order for them to appear on the day and time indicated at the place where the property is located in order to make the delivery to the lessor.

If the lessor does not come to receive the property on the day of the proceeding, the competent official for such purpose shall deliver the property to a bailiff appointed by him from the list of auxiliaries of justice for its custody until it is delivered to the lessor, whose expenses shall be borne by the bailiff.

A record shall be drawn up of all the foregoing, which shall be signed by the persons who took part in the proceedings.

Article 25. Requirements for unilateral termination by the lessee by notice with indemnity. In order for the lessee to be able to unilaterally terminate the lease in the event provided for in paragraph 4 of the preceding article, the following requirements must be met:

a) Communicate through the authorized postal service to the lessor or its legal representative, with the advance notice provided therein, indicating the date for the termination of the contract and stating that the compensation provided by law will be paid.

b) Consign in favor of the lessor and to the order of the competent authority, the indemnity referred to in the preceding article of this law, within three (3) months prior to the date set for the unilateral termination of the contract. The consignment shall be made in the entities authorized by the National Government for such purpose, and the competent authority shall provide a copy of the respective title to the lessor or shall send him a communication stating such circumstance, immediately it becomes aware of the same.

The value of the indemnity shall be based on the rent in effect on the date of notice;

c) At the time of consignment, the reasons for the consignment, as well as the name and precise address of the lessee or his representative, shall be recorded on the respective titles;

d) If the lessor complies with the obligation to deliver the property on the date indicated, he will receive the payment of the indemnity, in accordance with the authorization issued by the competent authority.

Paragraph 1. In the event that the lessor does not receive the property, the lessee shall be entitled to a refund of the compensation paid, without prejudice to the possibility of provisional delivery of the property in accordance with the provisions of the preceding article.

Paragraph 2. If the lessee, with the acceptance of the lessor, desists from terminating the lease, he may request the competent authority to authorize the return of the sum deposited.

Article 26. Right of retention. In all cases in which the lessor must indemnify the lessee, the latter may not be deprived of the leased property without having received prior payment of the corresponding indemnity or without having been duly assured of the amount thereof by the lessor.

Article 27. Discount for essential non-local repairs. In the case provided for in Article 1993 of the Civil Code, unless otherwise agreed between the parties, the lessee may deduct the cost of repairs from the rental value. Such discounts in no case may exceed thirty percent (30%) of the value thereof; if the total cost of the indispensable non-local repairs exceeds such percentage, the lessee may make periodic discounts up to thirty percent (30%) of the value of the rent, until the total cost incurred for such repairs is completed.

For the purposes of Article 1994 of the Civil Code, subject to compliance with the conditions set forth in said article, the parties may agree against the value of the rent.

In the event that the periodic discounts made in accordance with the provisions of this article do not cover the total cost of the indispensable non-local repairs, due to the termination of the lease, the lessee may exercise the right of retention under the terms of the preceding article, until the unpaid balance is paid in full by the lessor.

CHAPTER VIII

Persons engaged in the business of leasing real estate.

Article 28. Landlord registration. Regulated by National Decree 51 of 2004. Any natural or juridical person, whose main activities include the leasing of real estate for urban housing, whether owned by him or by third parties, or commercial intermediation between lessors and lessees, in municipalities with more than fifteen thousand (15,000) inhabitants, must register with the competent administrative authority.

In order to engage in the leasing or intermediation activities referred to in the preceding paragraph, it shall be indispensable to have complied with the registration requirement. Registered persons shall be subject to the inspection, surveillance and control of the competent authority.

Likewise, all natural or juridical persons who in their capacity as owners or sublessors enter into more than five (5) lease contracts on one or several properties, in the modalities described in article four of the present law, must also register.

It is presumed that whoever appears leasing in the same municipality more than ten (10) properties owned by him or by third parties, exercises the activities indicated herein and shall be subject to the corresponding regulations.

Article 29. Requirements to obtain the registration. Regulated by National Decree 51 of 2004. In order to obtain the lessor’s registration, the interested party must meet the following requirements:

a) Submit a document evidencing existence and legal representation, in the case of legal entities. In the case of natural persons, the commercial registry;

b) Submit the model or models of the leasing and management contracts to be used in the development of its activity;

c) Others determined by the competent authority.

Article 30. Term to apply for enrollment. Regulated by National Decree 51 of 2004. The persons referred to in Article 28 that are not registered before the competent authority, shall do so within three (3) months as of the effective date of this law. Those who are already registered, must also update the data indicated in the previous article, within the same term.

Natural or juridical persons who, after the present law, engage in the leasing of urban real estate property of others, must register within ten (10) days following the initiation of their operations.

Article 31. Condition to advertise as a lessor. In order to advertise themselves to the public as lessors, the persons referred to in Article 28 of this Law must indicate their current registration number. This obligation shall be enforceable as of the expiration of the terms set forth in the preceding article, as applicable.

CHAPTER IX

Inspection, control and surveillance of leasing matters

Article 32. Lease inspection, control and surveillance. Inspection, control and oversight will be the responsibility of the Mayor’s Office of Bogotá, D. C., the Governor’s Office of San Andrés, Providencia and Santa Catalina and the municipal mayors’ offices of the country’s municipalities.

Paragraph. For the purposes set forth in this law, the Office of the Mayor of Bogotá, D. C., shall establish the functional distribution it deems necessary between the undersecretariat for housing control, the general secretariat and the local mayor’s offices.

Article 33. Functions. Regulated by National Decree 51 of 2004. The territorial entities determined in the preceding article shall exercise the following functions:

a) Lease agreement:

To hear disputes arising from the failure to issue copies of the lease contract to lessees, guarantors and co-signers.

2. Assume the actions attributed to the competent authority in articles 22 to 25 in relation to the unilateral termination of the contract.

3. To hear cases in which illegal deposits have been made and to hear disputes arising out of the enforceability of such deposits.

(Declared EXEQUIBLE by the Constitutional Court by means of Ruling C-102-11 of February 23, 2011, Judge Dr. Mauricio González Cuervo).

4. To hear disputes arising from the non-issuance of payment vouchers to the lessee, when consignment has not been agreed upon as proof of payment.

5. To hear disputes arising from the inadequate application of the regulation of the commercial value of real estate intended for urban housing or increases.

6. To know of the non-compliance with the rules on maintenance, conservation, use and internal order of shared housing leases, subject to surveillance and control;

b) Control, inspection and surveillance function:

1. Investigate, sanction and impose any other corrective measures that may be necessary on the persons referred to in Article 28 of this law or on any other person who is a lessor or sublessor.

2. To apply the administrative sanctions established in the present law and other concordant norms.

3. To control the exercise of the urban housing real estate activity, especially with regard to the management contract.

4. To oversee compliance with the obligations related to public announcements and with the exercise of activities without obtaining registration, when applicable.

Paragraph. For the functions referred to in this article, the territorial entities may develop inspection, surveillance and control systems, according to the parameters established by the National Government within a period of six (6) months following the issuance of this Law. If the government does not do so, the competence will be up to the mayors.

CHAPTER X

Sanctions

Article 34. Sanctions. Without prejudice to any other sanctions that may apply, the competent authority may impose fines of up to one hundred (100) legal monthly minimum wages in force, by means of a reasoned resolution, for the following reasons:

1. When any person referred to in Article 28 does not comply with the obligation to obtain the registration within the term set forth in this law.

2. When the persons referred to in Article 28 of this Law fail to comply with any of the obligations stipulated in the management contract signed with the owner of the property.

(Declared EXEQUIBLE by the Constitutional Court by means of Ruling C-102-11 of February 23, 2011, Judge Dr. Mauricio González Cuervo).

3 When the persons referred to in Article 28 of the present law advertise to the public without mentioning the number of the current registration assigned to them.

4. For non-compliance with any other legal regulation to which they are subject, as well as for non-observance of the orders and instructions issued by the competent authority.

5. When the persons referred to in Article 28 of this law, by reason of their real estate activity, or in their capacity as lessor or sublessee of shared housing, fail to comply with the rules or orders to which they are bound.

6. When the persons who have the character of lessor of real estate destined to urban housing, whether or not they are subject to obtaining the lessor’s registration, fail to comply with the provisions of the cases set forth in paragraphs 1 to 3 of the preceding article.

(Declared EXEQUIBLE by the Constitutional Court by means of Ruling C-102-11 of February 23, 2011, Judge Dr. Mauricio González Cuervo).

Paragraph 1. The competent authority may suspend or cancel the respective registration in the event of repeated non-compliance with the conducts indicated in this article.

Paragraph 2. Only appeals for reconsideration may be filed against decisions ordering the payment of fines, suspension or cancellation of registration.

CHAPTER XI

Procedural aspects

Article 35. Precautionary measures in tenancy restitution proceedings. Repealed by literal c), art. 626, Law 1564 of 2012. In all proceedings for restitution of tenancy by lease, whatever the cause invoked, the plaintiff may request, from the filing of the claim or at any stage of the proceedings, the practice of attachments and seizures on the defendant’s property, in order to ensure the payment of the lease payments due or that may become due, of any other economic benefit derived from the contract, of the recognition of any indemnities due and of the procedural costs. Underlined text declared EXEQUIBLE by the Constitutional Court by means of Decision C-670 of 2004, on the analyzed charges.

Attachments and sequestrations may be decreed and practiced prior to the notification of the order admitting the claim to the defendant.

In all cases, the plaintiff must provide a surety in the amount and at the time indicated by the judge, to respond for the damages caused by the practice of such measures.

The defendant may prevent the practice of precautionary measures or the cancellation and lifting of those practiced, by providing security in the form and in the amount indicated by the judge, to guarantee compliance with the judgment.

The precautionary measures practiced shall be lifted if the defendant is acquitted, or if the plaintiff does not file an executive action in the same file within sixty (60) days following the execution of the judgment, to obtain payment of the fees owed. costs, damages or any other sum derived from the contract or judgment. If costs are ordered to be paid, the term will be counted from the execution of the order approving them; and if appealed, from the notification of the order ordering to obey the decision of the superior. See numeral 3, paragraph 1° , article 424 Code of Civil Procedure.

Article 36. Provisional restitution. Repealed by literal c), art. 626, Law 1564 of 2012. Whatever the cause of restitution invoked, the claimant may request, before the notification of the admissory order or at any stage of the process, a judicial inspection of the property, in order to verify the state in which it is located. If, during the proceedings, it is established that the property is in a state of serious deterioration or that it may become so, unoccupied or abandoned, the judge, at the request of the plaintiff, may order, in the same proceeding, the provisional restitution of the property, which will be physically delivered to a receiver. The sequestrator, with the prior authorization of the judge, may deliver the property in deposit to the plaintiff, who shall refrain from leasing it until the judgment ordering the restitution of the property is final. The provisional restitution order may not be appealed.

If the defendant in the opportunity to answer the claim, or within five (5) days following the practice of the proceeding, as the case may be, requests the judge to set a bond to the plaintiff to guarantee the damages that the provisional restitution may cause him, the judge, if he considers it convenient, will order the provision of a bond in the amount and opportunity indicated for such purposes, under penalty of the lifting of the measure.

During the term of the provisional restitution, the rights and obligations of the parties under the lease shall be suspended.

Article 37. Payment for related and additional services, things or uses. Repealed by literal c), art. 626, Law 1564 of 2012. Whatever the cause invoked, the defendant must present proof that it is up to date in the payment of the related and additional services or uses, provided that, by virtue of the contract, it has assumed the obligation to pay them. In this case, in order to be heard, the corresponding documents evidencing payment must be presented within a period of thirty (30) calendar days from the date on which payment was due. Underlined text declared INEXEQUIBLE by the Constitutional Court by means of Decision C-886 of 2004 and the remaining text EXEQUIBLE on the understanding that this procedural burden only operates if the cause invoked for the restitution of the property is the one established in numeral 2 of Article 22 of the aforementioned law.

Article 38. Consultation. Repealed by literal c), art. 626, Law 1564 of 2012. In no case will judgments issued in restitution of leased property proceedings be consulted.

Article 39. Preferential procedure and sole instance. Repealed by literal c), art. 626, Law 1564 of 2012. All proceedings for the restitution of leased property shall have preferential processing, except for those of guardianship. Non-observance of this rule will cause the judge or responsible official to incur in a cause of misconduct punishable by dismissal from office. The Superior Council of the Judiciary shall adopt the necessary rules for compliance with the provisions of this law within six (6) months following the effective date of this law. Underlined text declared EXEQUIBLE by the Constitutional Court by means of Decision C-886 of 2004, on the understanding that the preferential procedure established in the processes of restitution of leased property must operate without prejudice to the prevalence of constitutional actions.

When the cause of restitution is exclusively default in the payment of the rental fee, the process will be processed in sole instance.

Article 40. Repealed by literal c), art. 626, Law 1564 of 2012. Paragraph 7 of Article 20 of the Code of Civil Procedure shall read as follows:

“7. In the processes of tenancy by lease, for the current value of the rent during the term initially agreed in the contract, and if it is for an indefinite term, for the value of the rent of the last year. When the rent is to be paid with the natural fruits of the leased property, for the value of such fruits in the last year. In other tenancy proceedings, the amount shall be determined by the value of the property”.

CHAPTER XII

Final provisions

Article 41. Investment promotion. Partially regulated by National Decree 1789 of 2004, partially regulated by National Decree 1877 of 2004. With the purpose of encouraging the construction of new low-income housing to be leased through specialized companies regulated for this purpose, the income received by them as rental fees for each dwelling during the ten (10) years following its construction will be exempt income.

Likewise, investment funds may invest in real estate in accordance with the regulations issued by the National Government, and the income paid by these investment funds, originated in lease payments for each dwelling during the ten (10) years following its construction, shall be exempt income for the investor who receives it, in accordance with the regulations issued by the National Government for such purpose.

The State may, both at the national and territorial levels, establish subsidies to low-income families for the rental of housing, when they do not have it. Those displaced by violence, mothers who are heads of household and senior citizens will have preferential eligibility. The Government will establish the requirements, conditions and procedures for the allocation and use of these subsidies.

Article 42. Regime applicable to contracts under execution. Contracts in execution prior to the effective date of this law shall be governed by the substantive provisions in force at the time of their execution.

Paragraph. For all legal purposes, the rules related to the grounds for termination of lease agreements and especially those provided for unilaterally termination by the lessor are of a substantial nature and therefore will only apply to leases entered into after the enactment of this law.

Article 43. Transit of legislation, effectiveness and repeal. The substantive provisions of this law apply to contracts entered into after its entry into force, and the procedural provisions contained in articles 12 and 35 to 40 shall be immediately applicable to restitution proceedings regardless of the date on which the contract was entered into. For the purposes of the transit of legislation, the provisions of Article 40 of Law 153 of 1887 and Article 699 of the Code of Civil Procedure shall apply.

This law is in force from the moment of its promulgation and repeals Law 56 of 1985, Article 2035 of the Civil Code, Article 3 of Decree 2923 of 1977, Article 4 of Decree 2813 of 1978, Article 23 of Decree 1919 of 1986, Articles 2, 5 and 8 to 12 of Decree 1816 of 1990, as well as any other provisions that are contrary to it. Underlined text declared EXEQUIBLE by the Constitutional Court through Decision C-670 of 2004, on the analyzed charges.

NOTE: Published in the Official Gazette No. 45244. July 10, 2003.