Saturday, June 29, 2013

Law requires no specific form for lease contract

Dear PAO,
We are planning to require our tenants to sign a contract of lease. Is there a specific form for that?
Dear MAF,
By a contract of lease, a person, called the lessor, binds himself to give to another the enjoyment or use of a thing for a price certain and for a period, which may be definite or indefinite (Article 1643, Civil Code of the Philippines). It is a consensual contract which is perfected from the moment there is a meeting of minds between the lessor and the lessee as to the property to be rented and the amount of rent to be paid. As a rule, no other form shall be necessary for its perfection. However, there are certain contracts which the law requires to be put in writing, not for its validity but for the convenience of parties. One of which is an agreement for the lease of property for a period longer than one year. Article 1403 of the Civil Code of the Philippines provides:
“Article 1403. The following contracts are unenforceable, unless they are ratified:
1. xxx
2. Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum thereof be in writing, and subscribed by the party charged, or by his agent; xxx
e. An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein;
Even if you are not leasing your property for more than one year, it would be better for you and your tenants to execute a contract of lease as the same shall be the best evidence of your agreement. There is no specific form of a contract of lease. Like any other contract, a contract of lease shall be signed by the lessor and the lessee and shall contain the personal information of the parties and all the terms and conditions that they have agreed upon. You and your tenants are free to include in you contract of lease such stipulations, clauses, terms and conditions as you deem convenient, provided that they are not contrary to law, morals, good customs, public order, or public policy (Article 1306, Civil Code of the Philippines).
Among the terms included in a contract of lease are the following: the amount of the rent, the place and date when the rent is due, duration of the period of rent, restrictions on the leased premises, interests or penalties due for non-com-pliance of the agreements.
We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

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