The COVID-19 pandemic has brought about countless unforeseeable complications and challenges in various aspects of life, including the real estate industry. With the imposition of lockdowns and community quarantines, many tenants in the Philippines have been forced to reconsider their lease agreements. In some cases, they may even need to terminate their contracts early due to sudden changes in their financial situation. In this article, we’ll examine the process of pre-termination of lease contracts in the Philippines during the pandemic.
First, it’s important to understand that the pre-termination process for lease contracts in the Philippines is typically outlined in the lease agreement between the tenant and the landlord. In many cases, the lease agreement may specify certain conditions that must be met before a tenant is allowed to terminate the lease early. These conditions may include a notice period in advance, payment of penalties or fees, or proof of a valid reason for breaking the lease agreement. If the lease agreement does not contain any pre-termination provisions, the tenant and landlord should follow the general provisions of the Civil Code of the Philippines.
As the COVID-19 pandemic has brought about unprecedented economic challenges, landlords and tenants must work together to meet the needs and requirements of both parties. In recognition of the impact of the pandemic on tenants, the Department of Trade and Industry (DTI) has issued guidelines for the leasing of residential and commercial units during the pandemic. One of the key provisions in these guidelines is the implementation of a rent deferment program. This program allows tenants to defer their rent payments for a certain period, with the option of paying back the deferred rent over a longer period.
In situations where a tenant cannot afford to continue paying rent or deferment is not an option, the tenant may need to pre-terminate the lease agreement. In this case, the tenant must provide a notice of termination to the landlord, stating the reason for the termination. The notice period should be in accordance with the terms of the lease agreement or the Civil Code, and the tenant may be required to pay the remaining balance of the lease contract or a pre-termination fee.
Both tenants and landlords should remember that pre-termination of lease contracts should be carried out in good faith and with the aim of ensuring the best possible outcome for both parties. Tenants should provide sufficient notice and adhere to the terms of the lease agreement or the Civil Code. Landlords, on the other hand, should be reasonable and considerate of the tenant’s circumstances.
In conclusion, pre-termination of lease contracts in the Philippines during the pandemic should be approached with care and caution. Both tenants and landlords should work together to find the best possible solution for their unique circumstances. By following the guidelines set forth by the DTI and upholding the principles of good faith, both parties can navigate this challenging time with greater ease and understanding.