Home|Business Rental Problems

If you are renting a place to live and planning some major home renovation to improve the house, think twice before putting your hard earned money into it. Some people who rent sink some major cash or even go as far as acquiring a personal loan, multipurpose loan or even a business loan to finance the renovation project should be aware of some unscrupulous practices some landlord will do to take advantage of you. This also applies to people who rent their business establishment. Don't undertake expensive major renovation without first securing a written and notarized contract from your landlord prohibiting sudden rent increase, extending your rent contract for a couple of more years and prohibiting the landlord to sell the place you are renting during the contract period. I have two cases to share with you what are the consequence of undertaking major renovations without first securing a new contract.

I have a businessman friend who rented a run down warehouse near the highway in Buendia, Makati City. He is into selling second hand vehicles, so he decided to open a showroom and secured a 3 month trail contract with the landlord. he obtained a loan from the bank and spent more than 500k renovating the warehouse into a nice showroom. The landlord noticed this and took advantage. During the second month of the rental, he decided to increase the price of the rent 3 folds upon the expiry of the original contract. The businessman was of course shocked about this but was unable to do anything because anything done to the place is to the sole benefit of the landlord and he is in no way obligated to pay the for the improvements. If we observe this situation carefully, the landlord knew he could rent his place at a higher amount to someone else due to the improvements. So he deliberately tripled the rent to get rid of the businessman so he is free to rent it to someone else. If the businessman bites to the three folds increase of rent, the unscrupulous landlord will be doubly happy. Either way its a win-win situation for him.

My businessman friend naturally refuses the new arrangement and has consulted a lawyer about his situation to see if there is some remedy to be done. Now he's depressed due to having taken out a loan from the bank and now he has to pay for legal consultation fees aside from the expenses of running his business and feeding his family. Renovations are necessary when moving into a new place but anything that requires some major cash investment should be thought of carefully by first securing a written guarantee so you will benefit from whatever improvements you spent in the property.