Residential Lease Agreement

A Residential Lease Agreement is an agreement for one person (the "Lessee") to rent the property of another (the "Lessor") for residential purposes (e.g house, condominium, or apartment) over a specific period of time in exchange for a payment of rent.

A Residential Lease Agreement identifies basic information about the lease such as the property to be rented, the period of the lease, the security deposits, and the monthly rental payments. It outlines the obligations of both the Lessor and the Lessee during the period of the lease.


What are the different types of Lease Agreements?

There are different types of lease agreements, depending on what will be leased:


What is the difference between a Residential Lease Agreement and a Residential Sublease Agreement?

A Residential Sublease Agreement is entered into by a person (the sublessee), to rent a residential property from another person who is in his turn a lessee in the original Lease Agreement. This means there will be 2 separate agreements existing at the same time:

In a Residential Lease Agreement, the lessee is the one renting the property, while in a Residential Sublease Agreement, that same person is the sublessor who rents the property to a sublessee, while the original Residential Lease Agreement continues to exist.


Is it mandatory to have the Agreement?

Yes, because this will lay down the terms and conditions of the lease and will prevent the parties from reneging on the Sgreement. This will also serve as documentation for what was agreed upon by the lessor and the lessee.


What is Advanced Rent in the Lease Agreement?

The advanced rent is usually paid at the signing of the Agreement. It may be applied as rent for any of the months during the lease period, as agreed upon by the parties. If the property is located in a highly urbanized city and the rent is equal to or less than Ten Thousand Philippine Pesos (P10,000.00) or if the property is not located in a highly urbanized city and the rent is equal to or less than Five Thousand Philippines Pesos (P5,000.00), the Lessor cannot demand more than one-month advance rent.

The purpose of this is to ensure that the lessee will timely pay the rent and this amount can be used for those months where the lessee fails to pay rent.


What is a Security Deposit in the Agreement?

The security deposit can be used to settle rent, unpaid electric, telephone, water, or such other utility bills or repair any damage to the property caused by the acts or negligence of the Lessee. If the property is located in a highly urbanized city and the rent is equal to or less than Ten Thousand Philippine Pesos (P10,000.00) or if the property is not located in a highly urbanized city and the rent is equal to or less than Five Thousand Philippines Pesos (P5,000.00), the Lessor cannot demand more than two months security deposit which must be kept in a bank under the Lessor's account name during the entire duration of the lease.

If at the end of the lease, the rent and utility bills are paid and there is no damage to the property, the security deposit should be returned to the lessee.


What must the Agreement contain?

The Agreement contains the following information:


What is not allowed in the Agreement?

If the property is located in the National Capital Region or highly urbanized cities and the total monthly rent ranges from P1.00 to P10,000.00, or if the property is located in other areas and the monthly rent ranges from P1.00 to P5,000.00, then the lessor cannot raise the rent more than the amount of 4% of the original amount of rent from January 1 to December 31, 2024,

Further, the lease cannot simply be terminated due to the change of the ownership of the property such as by sale, donation, or inheritance.


What are the prerequisites of the Agreement?

The lessee must have checked the premises of the property to be leased before signing the Agreement, and if possible, he should verify first whether the lessor is the owner of the property or at least is authorized to set the property for lease before the Register of Deeds of the city or municipality where the property to be leased is located.


What has to be done once the Agreement is ready?

Once the document is completed, at least two original copies of the document should be printed and all of the attachments (referred to in the next question) described in the document should be attached. The Lessor and the Lessee, or their authorized representatives, should read, and then sign all the copies of the document and each should keep an original copy.

After this, the document may be notarized. If the parties would want to notarize the Lease Agreement, the document also includes an Acknowledgment portion, in which case, at least three original copies should be printed. Notarization of the document converts the document from a private document to a public document so that it becomes admissible in court without the need for further proof of its authenticity. To notarize the document, the parties must go to a notary public to acknowledge that they have signed the Lease Agreement freely and voluntarily. They should also present a valid I.D. issued by an official agency bearing their photograph and signature such as a driver's license or a passport, among others.

Once notarized, the Lessor and the Lessee should each keep at least one copy of the notarized document.


Which documents should be attached to the Agreement?

The following should be attached to the document, if applicable: