11 Mandatory Terms to Include in a Lease Agreement

When you’re about to rent a house or a condominium, it is important to check the rental contract or agreement before paying your landlord to move in. In the Philippines, the usual system when it comes to start living in the property that you are going to rent would be: “two months advance plus two months deposit”. This is the most common payment system in our country. And if we take into account that saving enough money it’s not an easy task in our times, it wouldn’t be fair to say that things are easy. That is the reason why it is so important to check that the rental contract is indeed what you and the landlord have agreed prior to moving in.

Terms to include in a rental contract

Therefore, here are six important items that should be included in a rental contract:

1. Name and Signature of the Tenants: In the rental contract, the tenants of the property should have their names and signature affixed in the contract. When the tenants have signed the document, this makes all of them legally responsible for the terms agreed between both the tenants and the landlord. This includes paying the full amount of the rent, as well as the proper use of all facilities in the house or condo.

Signing the rental contract means that each of the tenants will be responsible for paying the rent if they fail to pay the amount due to various circumstances.

Having the name and signature of each tenants in the property also gives the property owner the authority to kick out any tenant that violates the terms of the rental contract or agreement.

2. The Agreed Terms of the Tenancy for the Property: It should be stated in the rental contract what type of tenancy was agreed upon for the property, whether it is a rental agreement or a fixed-term lease. Most rental agreements usually go from one month to another and can be self-renewed, unless terminated by the landlord or tenant. Most leases go per year, however.

The end date for the rent or lease for the property should also be included in the contract. Upon signing, you recognize the end date of the rent or lease agreement and will be liable should you continue to live in the property without negotiating for an extension or renewal of contract with the property owner.

3. The Amount of Rent Agreed: The amount of rent per month for the property should be clearly stated as well in the rental contract or lease. It should also clearly specify when the due date is for paying the rent. However, there are specifics that need to be separated and explained clearly in the document:

  • Late fees: It should be stated whether late fees will be included should you or any of the tenants fail to pay the rent in time. Also state if the landowner allows a grace period before the late fees are implemented or collected.
  • Payment methods: This means how you are going to pay the rent. You can go from simply handing the cash to your landlord or by online banking.
  • Fee payments: Should the check payment bounce, you also need to decide on the fee payments.

4. Complete Description of the House, Fixtures and Furniture: The lease or rental contract should have the exact and complete description of the house and all its fixtures and furniture.

Think of it as a checklist that the tenant should look at when they decide to terminate their rental contract with the landowner. When that happens, this particular list will be checked to see if any part of the house or any of its furnishings need repair or restoration.

This also services as extra security for the property owner, since it will be the tenant’s 2 month deposit that will be deducted for the repairs and restorations.

This is a good reminder for the tenant to take good care of the house and the furniture and fixtures within, if it’s a fully furnished property!

5. Location of the said Property: The exact address of the property should be included in the contract because this is needed to make the rental contract or lease legitimate, especially when signed by a lawyer. Also, if ever you need to have your utilities installed in your home, your rental contract or lease will become one of the needed requirements, along with the complete address of your property.

6. Terms on Repair and Maintenance: Your landowner will sometimes specify what to do if in case something breaks inside the house, along with the responsibility for the repairs and maintenance. This is negotiable, so if you don’t agree with the terms place there, you can talk and negotiate with your landowner to have the terms changed.

7. Pets: If it’s a condominium, pets are definitely not allowed because of the limited space. In some townhouses, however, property owners may agree, but they usually place restrictions, especially on the type of pet and the number of pets that you can keep in the property.

8. Modifications: You should discuss with the property owner if you are allowed to change some parts of the house or condo. If the property owner agrees, then he will put this as one of the terms in the rental contract or lease.

9. Renewal of Contract: Your landlord will sometimes include details on how to renew your rental contract. Of course, there might be changes to the terms for the renewed contract. Talk to your landlord if some of the terms may seem disadvantageous for you.

10. Termination of Contract: This is an extra clause or term that most property owners are using now. If the tenant wishes to terminate the contract, he should notify the property owner, who will then give him 30 days to find a place for him to move out. Should the tenant instantly move out of the property before the 30 days grace period is up, he will instantly lose the two months deposit.

11. Non-Commercial Use: The property owner will also put a clause in the rental contract or lease wherein the tenant is not allowed to use the property for commercial uses. For example, putting up a shop or office within the property is not allowed.

Finally, some property owners have additional terms that they want to put in in the lease or rental contract, but the key here is to always make sure that both parties agree to the terms written in the contract.