How to Write a Proper and Detailed Lease Contract

Carefully worded, detailed, and thorough: here are tips for writing a proper lease contract

After your rental property itself, perhaps the next most important element of your rental business is your lease contract. Written to ensure that the rental agreement is established fairly and executed smoothly, the lease contract also provides lessors and lessees legal recourse in the event that it does not.

Writing a lease contract may seem complex, but it is not exactly difficult to complete. Mostly it is a matter of lessors and lessees reaching an agreement on what they require from the arrangement. Since Philippine law does not have a specific template for lease contracts at present, the key to making sure the one you draft fully serves its purpose lies in making sure the agreement covers everything that you believe is applicable. It is important to note, however, that a lawyer should read a draft to ensure that it conforms with existing laws and that loopholes are eliminated before they create complications.

In a nutshell, here are five important elements that every lease contract must have.

  1. Include All Responsible Parties

If there are multiple adult individuals occupying the leased premises, it is important that they be duly listed as tenants or lessees. This is to ensure that they are jointly liable for any breach of the lease contract. Naturally, the lessor or landlord(s) must also be duly listed on the lease contract to clearly indicate who is liable for any breaches that apply on the landlord’s end. For the sake of being most informative, you can include pertinent contact information such as addresses, telephone numbers, and email addresses.

  1. Be Clear with All Payment and Deposit

It seems like a no-brainer, but it still has to be emphasized how important it is to include all monetary provisions in a lease contract. Apart from the amounts that must be paid as rent and as a security deposit, other information that must be included is: frequency of payment (monthly, quarterly, semiannually, or annually), fees, penalties for late payments, acceptable modes of payment (post-dated checks, bank deposit, etc.), and where transactions must take place if applicable, among other stipulations.

  1. Summarize Other Fees

It is important to outline other fees or services that may come up during the lease, and clearly, indicate which party is responsible for each. Are there utility bills, connection fees, or other charges from you or outside providers? Who is responsible for what types of maintenance and which costs? What are and how much are the fees in the instance any of the terms in the contract are breached?

Be especially forthcoming about fees that may not immediately come to mind for tenants, like those for parking privileges, Internet access, and condo fees. Not informing them could mean you run the risk having to make the payments yourself.

  1. Include All Possible Rules, Disclaimers, Limitations, and Policies

Make sure that it is clearly stated in your policies how the leased property can or cannot be used or occupied. This includes policies on sub-letting, pets, if and how many visitors are allowed, if alterations or improvements can be done on the property, and the like. When all this information is clearly detailed in the lease contract, the lessees will not have the opportunity to feign ignorance of the rules should issues arise.

  1. And a Clause When You Need to Terminate the Agreement

While hopefully, this is never necessary, it is important to have something of an escape plan. A clause or notice that gives you the right to terminate the lease agreement and have the lessee vacate the premises can prevent you from wasting time, energy, and money on tenants who turn out to be not so ideal and who have a penchant for not following rules, devaluing the property, or missing payments.

This section need not be too detailed, as most provisions will have been covered throughout the rest of the lease contract, but should at least use language along the lines of:

“If Lessee breaches any provisions of this Lease Agreement, or present rules and regulations or those hereafter prescribed by Lessor, Lessor shall have the right and option to effectively terminate the Lease Agreement, reenter and take possession of the property, and Tenant hereby expressly waives all rights to any notices to vacate the property.”

Sources: Avail, Financial Samurai

Read our previous feature for more tips and advice.

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