The Lease Option Agreement is a sophisticated legal instrument used in the Philippines when a property owner wishes to lease their property while simultaneously granting the tenant an exclusive right to purchase it during or at the end of the lease term. This document type is particularly valuable in situations where potential buyers need time to arrange financing or want to "test" the property before committing to a purchase. The agreement must comply with Philippine Civil Code provisions regarding both leases and options, as well as relevant real estate laws and regulations. It typically includes detailed terms about the lease arrangement, purchase option terms, property maintenance responsibilities, and the mechanism for exercising the option. This document is commonly used in both residential and commercial real estate transactions, providing flexibility for both parties while establishing clear legal rights and obligations under Philippine law.
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1. Parties: Identification of the Lessor/Option Grantor and Lessee/Option Holder, including complete legal names and addresses
2. Background: Context of the agreement, including brief description of the property and parties' intentions regarding lease and purchase option
3. Definitions: Definitions of key terms used throughout the agreement, including 'Option Period', 'Purchase Price', 'Rental Payment', etc.
4. Property Description: Detailed description of the leased property, including exact location, boundaries, and improvements
5. Lease Terms: Core lease provisions including duration, rental amount, payment terms, and maintenance responsibilities
6. Option Terms: Details of the purchase option including option period, exercise price, and method of exercise
7. Option Exercise: Procedure for exercising the option, including notice requirements and payment terms
8. Rental Payments and Credits: Payment schedule, method of payment, and any rental credits applicable to purchase price
9. Security Deposit: Amount, terms, and conditions for security deposit
10. Maintenance and Repairs: Responsibilities of each party for property maintenance and repairs
11. Insurance and Taxes: Requirements for property insurance and responsibility for property taxes
12. Default and Remedies: Events of default under lease or option and available remedies
13. Assignment and Subletting: Rights and restrictions regarding assignment of lease or option rights
14. Notices: Method and addresses for formal communications between parties
15. Governing Law: Specification of Philippine law as governing law and jurisdiction
16. Execution: Signature blocks and execution requirements
1. Due Diligence Period: Include when buyer needs time to investigate property condition, title, or other matters before option period begins
2. Property Inspection Rights: Include when specific inspection rights during lease term need to be detailed
3. Option Extension: Include when parties want to allow for extension of option period under specified conditions
4. Financing Contingency: Include when option exercise is contingent on obtaining financing
5. Property Management: Include for commercial properties requiring specific management arrangements
6. Improvements: Include when lessee is permitted to make improvements that affect purchase price or require approval
7. Environmental Matters: Include for commercial properties or where environmental concerns exist
8. Right of First Refusal: Include when lessor grants additional right to match third-party offers
1. Schedule A - Property Description: Detailed legal description of property, including lot number, boundaries, and technical description
2. Schedule B - Rental Payment Schedule: Detailed breakdown of rental payments, due dates, and escalation terms
3. Schedule C - Option Price Calculation: Formula or method for calculating final purchase price, including any rental credits
4. Schedule D - Property Inventory: List of included fixtures, fittings, and equipment
5. Schedule E - Permitted Uses: Detailed description of allowed property uses and restrictions
6. Appendix 1 - Property Photos: Current photographs documenting property condition
7. Appendix 2 - Property Plans: Floor plans, site plans, or architectural drawings
8. Appendix 3 - Title Documents: Copy of title certificate and relevant property documents
Relevant legal definitions
Clauses
Relevant Industries
Real Estate
Commercial Property
Residential Property
Retail
Industrial
Office Space
Hospitality
Agriculture
Manufacturing
Warehouse and Distribution
Relevant Teams
Legal
Real Estate
Property Management
Finance
Operations
Risk Management
Facilities Management
Asset Management
Contract Administration
Business Development
Relevant Roles
Real Estate Agent
Property Manager
Legal Counsel
Real Estate Developer
Asset Manager
Chief Financial Officer
Real Estate Investment Manager
Facilities Manager
Commercial Lease Administrator
Property Development Director
Real Estate Portfolio Manager
Acquisitions Manager
Real Estate Operations Manager
Contract Administrator
Risk Management Officer
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