Lease Duration and Renewal Rights
Understand the minimum lease period, tenant renewal rights, and what happens when a lease expires. Learn how the Rent Control Act protects tenants from premature lease termination.
The Right to a Minimum Lease Period
“The minimum period for residential leases shall be one (1) year for units covered under this Act. However, the lessee may terminate the lease upon prior notice to the lessor of at least three (3) months before the intended termination. The lessor shall not refuse to renew or extend the lease on the ground that no written contract of lease exists between the parties.”
What This Means
For covered residential units, the MINIMUM lease period is 1 year. even if the contract says shorter, the tenant is entitled to stay for at least 1 year. However, the TENANT can terminate early with 3 months' prior written notice (the minimum period protects the tenant, not the landlord). After the initial term, the tenant has the right to renew. the landlord cannot refuse renewal just because the contract expired. Even without a written contract, the tenant is protected. a verbal or implied lease (like month-to-month) still gives the tenant these rights under covered units.
- Minimum lease: 1 year for covered units (protects tenant)
- Tenant CAN terminate early with 3 months' written notice
- Landlord CANNOT refuse renewal just because the contract expired
- Even month-to-month or verbal leases get minimum 1-year protection
- No written contract? Tenant is still protected. landlord cannot use this as eviction ground
Real-World Scenario
A landlord signs a 6-month lease with a tenant at P8,000/month (covered unit). After 6 months, the landlord tells the tenant to vacate because "the contract has expired."
Must the tenant leave after 6 months?
Tenant's Right to Renewal and Holdover
“No lessor or his successor-in-interest shall, during the period of this Act, be entitled to eject the lessee upon the expiration of the lease contract, unless a new contract of lease is offered by the lessor to the lessee under the same terms and conditions, with a rental increase not exceeding the allowable rate under this Act.”
What This Means
When a lease expires, the landlord must offer the tenant a new contract at the same terms (with at most a 7% rent increase). Only if the tenant REFUSES the renewal offer can the landlord proceed with eviction. If the tenant stays after lease expiration without a new contract (holdover), the lease is considered renewed month-to-month under the same terms. The landlord's obligation is to OFFER renewal. not to force it. But the tenant has the RIGHT to accept that offer. This provides occupancy security for low-income tenants who might otherwise be rotated out for higher-paying replacements.
- Landlord MUST offer a new lease at same terms (max 7% increase)
- Tenant has the RIGHT to accept the renewal offer
- Only if tenant refuses can the landlord seek eviction on this ground
- Holdover (staying after expiration): treated as month-to-month renewal
- New owner/successor-in-interest must honor existing tenants' renewal rights
Real-World Scenario
A landlord sells the apartment building to a new owner. The new owner sends letters to all tenants (all on expired month-to-month leases at P6,000-P8,000/month) demanding they vacate within 60 days because "the property has a new owner and new management."
Can the new owner evict all tenants?
Tenant's Right to Terminate Early
“The lessee may terminate the lease upon prior notice to the lessor of at least three (3) months before the intended termination. Upon such termination by the lessee, the lessor may demand from the lessee payment of any unpaid rental due up to the effective date of termination.”
What This Means
While the minimum lease protects tenants from premature eviction, tenants have the flexibility to leave early with proper notice. The requirement: at least 3 months' WRITTEN notice before the intended move-out date. The tenant must pay all rent due up to the termination date. After giving proper notice, the tenant can leave even if the contract says otherwise (e.g., a 1-year lock-in period in the contract is overridden by this statutory right for covered units). However, the security deposit rules still apply. the landlord can deduct unpaid rent or damages from the deposit.
- Tenant can terminate with 3 months' written notice
- Must pay all rent due up to the termination date
- Overrides contractual lock-in periods for covered units
- Security deposit: landlord can deduct unpaid rent/damages
- Notice should be in writing with proof of delivery (to avoid disputes)
Real-World Scenario
A tenant signed a 1-year lease in March with a clause: "Early termination requires payment of 3 months' rent as penalty." In September (month 7), the tenant gives written notice of termination effective December (3 months' notice). The landlord demands the 3-month penalty plus the remaining rent for January-March.
Is the tenant liable for the penalty and remaining rent?
Frequently Asked Questions
Can a landlord switch from a 1-year lease to month-to-month to make eviction easier?
Even on a month-to-month lease, the tenant of a covered unit has the same rights. the landlord can only evict on the specific grounds listed in Section 8. Month-to-month does NOT make eviction easier for covered units. The landlord must still offer renewal, can only increase by 7%/year, and must have a valid legal ground to eject. The lease type (monthly, annual, fixed-term) does not change the tenant's substantive rights under the Rent Control Act.
What if the tenant wants to stay but the lease expired and no new contract was signed?
The tenancy continues as a month-to-month lease under the same terms and conditions as the expired contract (this is called "holdover" or "implied renewal"). The tenant has the right to stay, and the landlord can only increase rent by the maximum 7% annually. The absence of a written contract is NOT grounds for eviction. Section 7 explicitly states the landlord cannot refuse renewal just because no written contract exists.
Can a fixed-term lease be longer than 1 year?
Yes. The 1-year minimum is a FLOOR, not a ceiling. Parties can agree to longer terms (2 years, 5 years, etc.). Longer leases provide more security for tenants and guaranteed occupancy for landlords. For covered units, the 7% annual increase cap still applies regardless of the lease length. For multi-year leases, it is advisable to include an escalation clause specifying exactly when and by how much rent increases each year (up to the 7% maximum).