My husband and I have been renting a small apartment for several months now. The landlady asked us for three months’ advance and three months’ deposit. We really did not have much choice but to accede to her, because we needed a place to transfer from the previous house we were renting. Our contract for a one-year rent was only verbal although she signed on a piece of paper receiving our advance and deposit. I just want to know if advances and deposits are really required. What will happen to the money we paid as our advance and deposit at the end of our lease contract?
Advance and deposit payments in connection with contracts of lease are common pre-arrangements. These provide assurance to lessors should there be damages incurred during the subsistence of the contracts. Such stipulations are both recognized and regulated under our law. To be specific, it is clearly provided for under Section 7 of Republic Act (RA) 9653, or the Rent Control Act of 2009:
“Rent shall be paid in advance within the first five (5) days of every current month or the beginning of the lease agreement unless the contract of lease provides for a later date of payment. The lessor cannot demand more than one (1) month advance rent. Neither can he/she demand more than two (2) months deposit, which shall be kept in a bank under the lessor’s account name during the entire duration of the lease agreement. Any and all interest that shall accrue therein shall be returned to the lessee at the expiration of the lease contract.
In the event however, that the lessee fails to settle rent, electric, telephone, water or such other utility bills or destroys any house components and accessories, the deposits and interests therein shall be forfeited in favor of the latter in the amount commensurate to the pecuniary damage done by the former.”
Applying the foregoing, we believe that your landlady has exceeded the authority granted to lessors under our law as she required you and your husband to pay three (3) months’ advance and three (3) months’ deposit. Corollary thereto, you may demand from her to return the excess amount of your advance and deposit payments. If she refuses to make such return, she may be held liable thereto, as it is expressly stated under Section 13 of the law that any person, natural or judicial, found guilty of violating any provision of RA 9653 may be penalized with fine of not less than Twenty-five thousand pesos (P25,000.00) nor more than Fifty thousand pesos (P50,000.00) or imprisonment of not less than one (1) month and one (1) day to not more than six (6) months, or both.
Insofar as the amounts which you and your husband have paid in advance or as deposit in accordance with RA 9653, the same must be returned to you at the expiration of your contract, including the interest that the same may have earned, except if you and your husband have remaining liabilities with your landlady such as unpaid rent, unpaid electric, telephone, water or any other utility bills, or if there has been any damage to the property that you have leased.
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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