The Lease Agreement

Find out what information should be included in a rental agreement in the Philippines...

It is best to have the written agreement signed personally by the landlord and the tenant. It can be the case that the landlord promises certain provisions verbally, only to reverse them later in the written contract. The written contract or agreement is legally binding. It is also advisable to engage a good property lawyer to look into the contract before signing.

The contract should include the following:

  • Date of execution of the agreement
  • Landlord’s name
  • Address of property to be leased
  • Name of tenant
  • Purpose(s) of the agreement
  • Term of lease
  • Rental rate and due date
  • Amount of deposit
  • Conditions for termination of contract
  • Responsibilities of the landlord and tenant
  • Expiry date of the lease
  • Judicial relief (the legal costs that may be incurred in the event of a dispute between the landlord and tenant)

An inventory list of all appliances, furniture and fixtures is provided by the landlord or the agent and signed by the tenant. It is the tenant’s responsibility to double-check the list and take note of any damages or any items missing from the list. When the tenancy agreement expires, the landlord or agent will assess the property for any damages and deductions will be made from the deposit.

Short Term Rentals

The typical lease term for condominiums, apartments and houses is one year. If the tenant will only be living in the Philippines for a few months, it is best to rent a serviced apartment.

Obligations of Landlords and Tenants

Deposits

The landlord is entitled to demand from the tenant a payment of one month’s rent in advance plus a deposit of two months’ rent. The deposit is used to cover damages and repairs in the rented property.

Annual Rent Increase

It is also important to note that the landlord is not allowed by law to increase the rent by more than 7% if the unit is occupied by the same tenant. A change of rate is only allowed once the unit becomes vacant for new tenants.

Subletting

The law clearly states that a tenant can only sublet the unit when on receipt of written consent from the unit owner. Without the written consent, this may be grounds for legal eviction.

Legal Eviction from the Property

As previously mentioned, subletting without written consent by the unit owner is cause for eviction.

Failure to pay the rent for three months is also grounds for eviction.

The tenant cannot be legally evicted if the property has been sold to a third party. The terms of the lease agreement will stand.

The tenant may be required to vacate the unit if the landlord or their immediate family members have a legitimate need to use it. However, the following conditions should apply:

  • The rental agreement has expired
  • The landlord has given the tenant three months’ advance notice to give him or her ample time to look for another place
  • The landlord is not allowed to lease the property to a third party for at least one year

The tenant may also be asked to leave if the unit is subject to an order of condemnation by appropriate authorities and the landlord needs to make the necessary repairs to make the property safe. The following conditions should apply:

  • The tenant that was evicted should be given first priority to rent the unit after its repair
  • Should the landlord raise the rent, it should be proportionate to the expenses incurred for the repair
  • If the unit is completely demolished and a new building is built on the same site, the evicted tenant will not be given first priority.
Terminating a Rental Agreement

The conditions under which the tenant can terminate the rental agreement are included in the rental contract, and should be checked when signing the rental agreement.

Utilities

It is the tenant’s responsibility to pay for water, electricity, gas and telephone services, including the cost of application from the service providers.

Further Information