renting a piece of land

Cantaloulou · #1 09-03-2009, 06:05 PM

A few questions about renting a piece of land:

We wish to rent a piece of land in La Romana on which we want to build a modest outdoorsy comedor for locals. Investment calculated ±RD$100,00 to build the cement rectangle 20x14 that will house kitchen and a palapa above it all.

I know nothing about renting a piece of land but here are some conditions I think should be in my contract since we are taking all the risks and the owner none. Let me know if I'm missing anything...

1) we want owner to fork up the cost of connecting from city water CORRAROM to the land and sanitary installations (after all, if and when we finish renting this stuff will benefit the next guy)

2) is it realistic to expect landlord to refund our building cost if they sell their land say within 1-2 years (we want the owner to be serious in renting us the land for a 2yr period, current contract draft only call for a 3 month notice, which is crazy should for example the owner sell in 6 months)

3) we want owner to offer us first option to buy should they sell and provide us with 6 months notice to move should they sell the land

4) what is a reasonable acceptable yearly increase for a piece of land? (prelim. draft says owner wants 15%, we think its nuts!!!)

Are we missing more important points, please any advice would be greatly appreciated...

Thanks!

Hillbilly · #2 09-03-2009, 07:31 PM

I am sorry, but I cannot see this working in any way, shape or form...

there are just too many loose ends.

He will not take out the contract with the water corporation, that is for you to do.

As for re-embursement of your investment? Good luck at that...You build, he sells, you go to court.
See, you will have created what is known as a "punto comercial" and that is worth something...and for him to boot you off he will have to pay for your "Point"...a point in your favor.

However, have a lawyer go over any lease with a fine tooth comb....

Who knows,,stranger things have happened...

You can get the first option, that is not too difficullt unless your place is a success and then the owner wants it...once more to court....

NOt for me but if you are young and patient, just maybe...

HB

MikeFisher · #3 09-04-2009, 09:54 PM

you find a piece of land you wanna rent for the kinda business you have in mind.
you ask landlord about the monthly rent.
landlord tells you a number, that's of course for the piece of land like it is at that same moment, without any extra investment for the landlord involved.
you could deal with him to tent the property with water and electricity or internet etc etc etc connected and included, but for that landlord would ask for a higher monthly rate and a higher deposit of course.
you treach a agreement on the above points, everybody is happy.
your business is running well.
at the moment the business is making monthly more money than you pay rent to the landlord, the landlord does not renew your rental contract and kicks ya out to run it on his own or rent it finished and up and running to the highest bidder.
that's the usual way.
welcome to business paradise.
Mike

J D Sauser · #4 09-05-2009, 12:24 AM

Land leases for commercial purposes are not uncommon, as I seem to see, here in the DR too. What may seem uncommon is your extreemely short lease term of 2 (?) years, whereas it usually would be closer to 20 years or more.

From what I have been led to understand from previous discussions, I believe that commercial leases (which is what you seem to look at) are governed by the same laws as residential leases. If this would hold true, we could hope to be able to assume that during the contractual lease period, the landlord would have it very difficult to cut the term short. So, so far, your investment would seem to be protected. Maybe a mutual conventional of such an early termination of the lease could be agreed upon, however I don't know if Dominican law has a way to handle this.
Generally, unless specified otherwise, all unmovable betterment will be owned by the landlord after the lease expires. The lease contract will probably also limit/specify what kind, type and extent of betterment can/can not be done by the tenant.
I seem to remember that the law provides for an optional(!) lease increase of UP TO 10% IF both parties agree. Nobody has ever be able to tell me in a factual manner, what happens when the tenant will (most likely) NOT show much enthusiasm for any rate hike.
Betterment of the property should be negotiated with and fulfilled to the tenant's satisfaction BEFORE you fetch over any considerable amounts of money. Landlords are quick to promise a lot just to cut a deal, but tend to be slow to comply once they pocketed the money.

As always, I am not a lawyer and therefor this in NOT legal advise.

The best advice you thus already got, is to retain the services of a serious, reputable and in the subject knowledgeable attorney BEFORE you do anything and all the way thru the whole deal.

... J-D.

Cantaloulou · #5 09-06-2009, 07:34 PM

Much info thanks!!!

I'm not looking for owner of land to sign the CORRAROM contract, just that she pay the cost of installing the water from the city to my building and for the septic tank (both things will be permanent and should I move will remain, thus I don't fell its up to the leasee to pay 4 this)...

I will be looking for a longer lease as one of u mentioned 2 yrs seems ridiculous even with one yr automatic renewal...

I realize now this needs to be reviewed by a lawyer with commercial/real estate experience! As the "punto comercial" mention is indeed and very interesting notion to consider. Because as some of u have said, when my business is up and running and successful, I don't want the owner to not renew the lease thinking lemme run this business.

Thanks all for info!!!

J D Sauser · #6 09-06-2009, 08:14 PM

Quote:

Originally Posted by Cantaloulou

Much info thanks!!!

I'm not looking for owner of land to sign the CORRAROM contract, just that she pay the cost of installing the water from the city to my building and for the septic tank (both things will be permanent and should I move will remain, thus I don't fell its up to the leasee to pay 4 this)...

... again, it's up for negotiation BEFORE you lease or sign anything. There is no obligation by the land owner to adapt anything to your wishes beyond what the law requires (if the law requires anything at all). IF you reach a deal with the land owner which includes any work or investments done at the landowner's cost, make sure you ask your lawyer to make sure that any payments to the landlord are held in escrow until the owner complies.

Quote:

Originally Posted by Cantaloulou

I will be looking for a longer lease as one of u mentioned 2 yrs seems ridiculous even with one yr automatic renewal...

I realize now this needs to be reviewed by a lawyer with commercial/real estate experience! As the "punto comercial" mention is indeed and very interesting notion to consider. Because as some of u have said, when my business is up and running and successful, I don't want the owner to not renew the lease thinking lemme run this business.

Thanks all for info!!!

I am led to understand that the laws governing real estate rental has been amended or modified to give the landlord the right to have the tenant vacate at the end of the lease term, should the landlord wish so.
You will want to have your lawyer certify to you that. if an automatic (non mutual) renewal clause is included, the landlord could not use that new law to demand the property to be vacated at the end of a term.

Please also consider that the law is what it is. And that some locals have a habit of successfully act outside the boundaries of it. There have been cases where local landlords wanting their tenants out, found ways to persuade them that it was time to move on one way or the other. One documented such case tells the story of a tenant who did not listen and then finding himself surprised not only to be raided by the police but them miraculously finding drugs on the rented premises, all ending with the unlucky Gringo tenant being jailed and being "sausaged" thru the legal "system" for over a year. I am not saying this is a rule, but as a rule, try not only to have your business run in a legally very clear and professional manner BUT also choose your landlord as carefully as landlords would choose tenants... that includes an extensive background and history check. You want things to go smooth.

... J-D.