A financial lease goes in writing — and on an immovable, by deed and recorded

They are Articles 1359, 1360 and 1363 of the Civil Code of 2020: the form a financial lease requires, its maximum duration over immovables, what recording is for, and the warning that this chapter complements a special statute.

Parties to a financial lease over movable or immovable property governed by the Puerto Rico Civil Code.

• That the financial lease be in writing: Article 1359 requires it for any thing.Verified against the official source
• If the thing is immovable: that it be in a public deed and recorded in the Property Registry, regardless of its duration.Verified against the official source
• If it is over immovables: that its duration not exceed ten years.Verified against the official source
• For it to be effective against third parties: that it be recorded in the corresponding registry, in accordance with the applicable special statute.Verified against the official source

• The written contract: it is the minimum Article 1359 requires for any financial lease.
• If the thing is immovable, the public deed, because the article requires it whatever the duration.
• Proof of recording in the corresponding registry, on which effectiveness against third parties depends.

1. 1

   Step 1: In writing, always

   Article 1359, first sentence: the financial lease must be in writing. There is no exception by amount or by kind of thing.

2. 2

   Step 2: If the thing is immovable, the bar rises

   The same article: if it concerns immovable property, it must be in a public deed and be recorded in the Property Registry. Two requirements, not one.

3. 3

   Step 3: "Regardless of its duration"

   The phrase closes the commonest doubt: there is no minimum number of years above which the deed and recording become necessary. It applies whenever the thing is immovable.

4. 4

   Step 4: The ceiling: ten years over immovables

   Second paragraph of Article 1359: a financial lease over immovable property has a maximum duration of ten (10) years. The article does not say what happens to anything agreed above that maximum, and this guide does not fill it in.

5. 5

   Step 5: What recording is for

   Article 1360: the financial lease is effective against third parties only where it has been recorded in the corresponding registry. Between lessor and lessee the contract exists; what recording adds is effectiveness against those who did not sign.

6. 6

   Step 6: Which registry corresponds

   The same article refers out: in accordance with the applicable special statute. For immovables, Article 1359 itself names the Property Registry; for other things, the Code does not say here and this guide does not guess.

7. 7

   Step 7: This chapter complements, it does not replace

   Article 1363, closing the chapter: the rules of this chapter complement and do not replace what the special legislation regulating financial leases provides. Anyone with such a contract must also look at that legislation.

8. 8

   Step 8: What this guide cannot tell you

   The Code refers to that special legislation without naming it, so no statute is cited by number here and no text we have not read is linked. Nor do we publish what a deed or a recording costs: those figures live in notarial and registry legislation, which we did not read for this guide.

The deed is executed before a notary and the recording is filed in the Property Registry where the thing is immovable, under the rules and fees of registry legislation, which we did not read here. The Code names no administrative agency for this contract.

• Closing a financial lease orally: Article 1359 requires it in writing.
• Believing a short financial lease over an immovable escapes the public deed: it applies regardless of duration.
• Believing the deed alone suffices without recording: the article requires both for immovables.
• Agreeing more than ten years over an immovable.
• Thinking that without recording the contract does not exist: it exists between the parties; what is missing is effectiveness against third parties.
• Thinking the opposite, that it works against third parties without recording.
• Looking in the Code for the registry that corresponds to a movable: it refers to the applicable special statute.
• Reading only this chapter and not the special legislation it complements.

These are the government pages this guide is based on.

• Poder Judicial de Puerto Rico

  Poder Judicial

  bvirtualogp.pr.gov