Commercial Lease To Purchase Agreement Template for Philippines

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Commercial Lease To Purchase Agreement

"I need a Commercial Lease to Purchase Agreement for a retail space in Makati City, Philippines, where my company will operate a high-end restaurant with the option to purchase after 2 years, starting March 2025, with monthly rental payments of 150,000 PHP to be credited towards the final purchase price."

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What is a Commercial Lease To Purchase Agreement?

The Commercial Lease To Purchase Agreement is a sophisticated legal instrument used in the Philippine real estate market when a business wants to lease a commercial property while securing the right to purchase it in the future. This arrangement is particularly valuable in scenarios where businesses need time to establish operations or secure financing before committing to a purchase, or when property owners prefer a gradual exit from their investment. The document must comply with Philippine property laws, including the Civil Code and relevant commercial regulations, and typically includes detailed provisions for both the lease period (covering rent, maintenance, and use) and the purchase option (including price, exercise terms, and credit mechanisms). It's commonly used for retail spaces, office buildings, warehouses, and other commercial properties, providing protection for both parties while establishing clear terms for the potential transition from lease to ownership.

What sections should be included in a Commercial Lease To Purchase Agreement?

1. Parties: Identification of the Lessor/Seller and Lessee/Buyer with complete legal names and addresses

2. Background: Context of the agreement, including property overview and parties' intentions regarding lease-to-purchase arrangement

3. Definitions: Definitions of key terms used throughout the agreement

4. Property Description: Detailed description of the commercial property including exact location, boundaries, and improvements

5. Lease Terms: Specific terms of the lease including duration, rental amount, payment schedule, and maintenance responsibilities

6. Purchase Option Terms: Details of the purchase option including purchase price, option period, and how rental payments apply to purchase price

7. Payment Terms: Comprehensive payment structure for both lease and purchase components, including deposit requirements

8. Use of Property: Permitted commercial uses, restrictions, and compliance requirements

9. Maintenance and Repairs: Responsibilities for property maintenance, repairs, and improvements during the lease period

10. Insurance and Taxes: Requirements for property insurance and responsibility for property taxes

11. Exercise of Purchase Option: Process and requirements for exercising the purchase option

12. Default and Remedies: Events of default and available remedies for both parties

13. Assignment and Subletting: Terms governing assignment of rights and subletting restrictions

14. Governing Law: Specification of Philippine law as governing law and jurisdiction

15. Termination: Conditions and procedures for agreement termination

16. Signatures: Execution block for all parties and witnesses

What sections are optional to include in a Commercial Lease To Purchase Agreement?

1. Broker Representation: Include when real estate brokers are involved in the transaction

2. Environmental Matters: Include for properties with potential environmental concerns or specific environmental compliance requirements

3. Tenant Improvements: Include when specific improvements by the tenant are permitted or required

4. Common Areas: Include for properties in commercial complexes with shared facilities

5. Right of First Refusal: Include if the lessee has additional rights to purchase if lessor receives other offers

6. Force Majeure: Include specific provisions for unforeseen circumstances affecting property use or payments

7. Guarantees: Include when personal or corporate guarantees are required

8. Utilities and Services: Include detailed provisions for properties with complex utility arrangements

What schedules should be included in a Commercial Lease To Purchase Agreement?

1. Schedule A - Property Details: Detailed technical description of the property including lot plans and technical specifications

2. Schedule B - Payment Schedule: Detailed breakdown of lease payments, purchase option payments, and credit allocations

3. Schedule C - Permitted Uses: Specific list of permitted commercial activities and use restrictions

4. Schedule D - Initial Property Condition: Detailed inventory and condition report of the property at lease commencement

5. Schedule E - Required Insurance: Specific insurance requirements and coverage amounts

6. Schedule F - Maintenance Schedule: Detailed maintenance responsibilities and schedules for both parties

7. Appendix 1 - Property Title Documents: Copies of relevant property ownership documents

8. Appendix 2 - Local Authority Permits: Copies of relevant business permits and zoning clearances

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Clauses
Relevant Industries

Retail

Office Space

Industrial

Warehousing

Manufacturing

Food and Beverage

Healthcare

Technology

Professional Services

Education

Hospitality

Entertainment

Logistics

Commercial Real Estate

Relevant Teams

Legal

Finance

Real Estate

Operations

Facilities Management

Risk Management

Procurement

Business Development

Commercial Operations

Property Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Real Estate Manager

Property Manager

Commercial Lawyer

Business Development Manager

Facilities Manager

Operations Director

Legal Counsel

Finance Director

Commercial Director

Procurement Manager

Risk Manager

Real Estate Director

Branch Manager

Store Operations Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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