BEYON THE SECURITY DEPOSIT

A difficult situation just happened in one of our rental units.

And this is one of those rare cases where the security deposit — even at two (2) months’ rent — simply wasn’t enough to cover the damage.

It was an expensive lesson.

So moving forward, we added a clause to our lease contract to avoid any misunderstanding on the tenant’s side — and to make it clear that they remain liable for any amount exceeding the security deposit.

Yes, some might say it’s “common sense.”

But in real estate, common sense doesn’t protect you — written contracts do.

Here’s the clause we added:

“The Security Deposit shall not be construed as a cap or limit on the LESSEE’s liability. Should the Security Deposit be insufficient to cover holdover charges, unpaid rent, utilities, repairs, damages, penalties, or any other amounts due, the LESSEE shall remain personally liable for the full deficiency.

The LESSOR reserves the right to demand payment and pursue all legal remedies available under Philippine law to recover such deficiency, without prejudice to any other rights under this Contract.”

Now here’s the next question — and honestly, this is where it gets tricky:

If the damage is so serious that repairs will take one (1) to two (2) months…

Should the former tenant still be liable for rent during the repair period?