Is your landlord-tenant relationship not working out for you? You don't have to put up with a difficult tenant or worry about litigation. As a landlord, you should be aware of your right to pre-terminate a condo lease contract under certain circumstances. It's also important that you know when your tenant may validly seek for early termination of a lease agreement.
Remember that a rental contract is a legally binding document, and any violation of its terms may give rise to legal consequences. Leasing out your condo again after a bad experience shouldn’t hinder you from being cautious and meticulous in dealing with potential tenants.
The rental law in the Philippines provides remedies for both landlords and tenants in situations where it becomes necessary to end the lease contract prematurely.
Here's a landlord's guide on common reasons why a landlord wants to break up a lease early, how to invoke the pre-termination clause in the lease contract, and few tips on how to look for new tenants.
Always refer to the lease contract
The lease contract defines your relationship with your tenant. It sets both your rights and responsibilities and the grounds for termination before the expiration of the lease. Always refer back to the lease contract when you're in doubt. One important thing you should remember is that the stipulations must conform to the rental law in the Philippines. A stipulation that's contrary to law, public policy, morals, and good customs cannot be given effect.
Lease contracts provide for a pre-termination clause that indicates the valid ground each party may invoke, the manner of termination, and possible entitlement to damages.
Know each other's obligations
Both the landlord and tenant may give cause for early breaking up of the lease. The causes may be a violation of the other party's obligations under laws or breach of any condition or term of the lease contract.
The New Civil Code provides for the rights and obligations of lessors (landlords) and lessees (tenants). The landlord is obliged to deliver the unit (the condo space) is such a condition as to render it fit for the use intended; to do necessary repairs during the lease, unless there is a contrary stipulation; and to ensure the tenant's peaceful and adequate enjoyment of the lease.
The tenant is expected to pay rent according to the term stipulated; lease the unit for the stipulated purpose as a diligent renter, and pay for the expenses for the deed of the lease. Any violation of these obligations is a valid reason to end the lease early.
The law between the parties
Landlords can set rules on his condo unit. He may limit the number of tenants under a lease contract or prohibit certain renovations. A lease contract is typically prepared by the landlord to which the prospective tenant shall agree to. In some instances, the tenant may request to amend stipulations and the landlord is free to accept and reject. The tenant may ask to repaint the kitchen cabinets or change the flooring in the bedroom. Once the contract is finalized and signed by both parties, it shall be the law between them. Much like the rental law in the Philippines. Any breach of the conditions of the contract shall be ground for pre-termination and may entitle the aggrieved party to payment of damages.
Pre-termination due to non-payment
Can you eject your tenant for non-payment of rent? The quick answer is yes, but subject to conditions. Payment of the rent for the amount and on the date stated in the contract is one of the tenant's obligations. Failure to comply with this obligation is a valid cause for pre-termination.
To exercise your right to eject your tenants, there are things you should remember. First, there must be a demand on the due date. Without demand, the tenant cannot be in delay. An exception is when the contract explicitly indicates that a demand is not necessary.
While you can terminate the contract under valid causes, ejectment of a tenant may only be done judicially. This means that you need to follow the law on unlawful detainer. Use the rental law in the Philippines as reference.
Forfeiture of deposits and advance rent
The pre-termination clause in the lease agreement should indicate the consequences of giving cause for the pre-termination. Based on the rental law in the Philippines, the contract may indicate that the landlord shall collect unpaid bills and damages from the tenant and forfeit advance rent and security deposit.
Typically, the unpaid bills and damages shall first be satisfied by the security deposit, then by any other remaining advance monies. The contract may indicate that the landlord may still collect any deficiency. This would allow the landlord to go after you for any unpaid rent or damages even after you’ve moved out. So, if you plan to leave the property before the end of the lease, you should check your contract to see if you’ll still be liable for the remaining rent due.
Assess areas of improvement
An unpleasant experience with a tenant shouldn’t discourage you from leasing your condo space again. Business has its challenges and these can help you address areas of improvement. You can revisit the lease contract, rights of your tenants and apply revisions accordingly. Seek the guidance of a lawyer if you must. You may also reconsider the qualifications of potential tenants. After all, it would be easier to avoid potential problems when you know who you’re dealing with from the very beginning.
Make all necessary repairs before putting it out in the market again. If you're offering a fully-furnished unit, check whether the appliances are in working condition. Check the state of the furniture and see to it that they don’t have any damage. Cleanliness should also be a priority. A space that’s in tip-top shape would give any potential tenant a good impression.
It’s also important that you’re updated with the current market rates. This way, you can price your rental competitively. Take some time to research the prices of similar units in the area. You can also ask around for advice from property managers or other condo owners. They might have some insights that you could use.
A smart solution for condo landlords
You have an option to make your life a little easier: secure leasing services. A leasing company shall do all the hard work such as marketing your DMCI Homes condo space for potential tenants, preparing the lease contract, collecting rent, and keeping your unit in good condition. No need to worry about the nuances of dealing with a difficult tenant and breaking up a lease agreement early.
Your DMCI Homes Leasing Services team shall do the following: source potential tenants; inspect and monitor the units; administer lease contracts; collect and endorse rents to unit owners; negotiate renewals, extensions, and handle contract terminations; and assist in the move-in and move-out of tenants. You just need to sit back and wait for your rental income.
Leasing out your condo unit is a good source of passive income. The demand for condo spaces remain high everywhere. But being a landlord isn't always a walk in the park. You should be prepared to deal with difficult tenants and unfortunate events that may require for early termination of a lease contract. Know the rights and obligations of the landlord and tenant under the laws. Revisit the terms and conditions of the lease contract. Educate yourself on lawful remedies in case your landlord-tenant relationship goes awry.
It's never easy to deal with lease termination, whether it's on your own accord or because your tenant has decided to leave early. But as a landlord, there are certain things you can do to make the process go more smoothly.
- Review your lease agreement to see what it says about early termination. This will give you a better understanding of your rights and obligations. As well as what, if any, penalties may be incurred.
- Talk to your tenant about their reasons for wanting to leave early. There may be a valid reason that you're unaware of. If so, try to be accommodating and work out a solution that's agreeable to both parties.
- Be clear about what you expect from the tenant in terms of notice and compensation for any damages. This will help avoid any misunderstandings down the road.
Keep in mind that early lease termination can be a stressful experience for both you and your tenant. So try to remain calm and reasonable throughout the process. You're more likely to come to a resolution that everyone is happy with.
To learn more about DMCI Homes pre-selling and ready for occupancy projects, units for lease, and special promos, log on to www.dmcihomes.com or call (632) 5324-8888. You can also check out https://leasing.dmcihomes.com/ for currently available condos for rent.