When it comes to property rental in the Philippines, having a contract of lease with a right of first refusal is crucial for both the tenant and landlord. Having this agreement in place can help ensure the stability and security of the rental property, as well as protect both parties’ interests. In this article, we’ll discuss what a contract of lease with a right of first refusal is, and provide a sample to guide you in drafting your own agreement.
What is a Contract of Lease with a Right of First Refusal?
A contract of lease with a right of first refusal is a legally binding agreement between a landlord and a tenant, which grants the tenant the first option to purchase the property before the landlord can sell it to someone else. Essentially, this agreement gives the tenant a shot at buying the property they have been renting, if the landlord decides to sell.
The right of first refusal is particularly useful for tenants who have invested time and resources in improving the rental property, which may make them interested in owning it. It also benefits landlords, as it can help ensure that the property is sold to someone who is already familiar with it, reducing the risk of selling to someone who may not appreciate the property’s value.
Sample Contract of Lease with a Right of First Refusal Philippines
Below is a sample contract of lease with a right of first refusal that you can use as a guide when drafting your own agreement:
This Contract of Lease with a Right of First Refusal (“Agreement”) is entered into on [insert date] between [insert landlord’s name], the “Landlord”, and [insert tenant’s name], the “Tenant”.
1. Premises. The Landlord hereby leases to the Tenant the property located at [insert property address] (“Property”) for a term of [insert lease period] starting on [insert lease start date].
2. Rent. The Tenant shall pay the Landlord a monthly rent of [insert rent amount] on or before the [insert rent due date] of each month.
3. Security Deposit. The Tenant shall provide a security deposit of [insert security deposit amount] to the Landlord upon signing this Agreement. The security deposit shall be used to cover any damages or unpaid rent at the end of the lease.
4. Right of First Refusal. The Tenant shall have the right of first refusal to purchase the Property if the Landlord decides to sell it during the term of this Agreement. The Tenant shall have [insert number of days] to exercise this right of first refusal from the date the Landlord notifies the Tenant of their intent to sell the Property.
5. Purchase Price. If the Tenant decides to exercise their right of first refusal, the purchase price shall be the fair market value of the Property at the time of sale, as determined by a licensed appraiser agreed upon by the Landlord and the Tenant.
6. Condition of Property. The Tenant shall maintain the Property in good condition and shall be responsible for any damages caused by the Tenant or their guests.
7. Termination. This Agreement shall terminate at the end of the lease period, unless renewed by mutual agreement between the Landlord and the Tenant.
8. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Philippines.
In Witness Whereof, the parties have executed this Agreement as of the date first mentioned above.
[Insert Landlord’s Signature]
[Insert Tenant’s Signature]
A contract of lease with a right of first refusal can be a valuable tool for both landlords and tenants. It helps ensure the stability and security of the rental property, while also providing an opportunity for the tenant to own the property they have been renting. When drafting your own agreement, be sure to consult a legal professional to ensure that your agreement complies with all relevant laws and regulations.