• Lease agreement with petroleum company profitable or not

I want to lease my land to petroleum company for retail petrol station for 29 years of contract. My land is 5 km from wardha city in Maharashtra state costing Rs. 1 CR per acre, 1st I am just lending my land on lease agreement as a owner of land and the dealership is given to SC/ST candidate, 2nd I need to know Whether it is profitable to lease my land for the said purpose in long term and 3rd how and on which points I should negotiate with the company on rent agreement including increments in rentals considering inflation and property valuation in future. Plz suggest and provide your valuable inputs
Asked 4 years ago in Property Law
Religion: Hindu

7 answers received in 1 day.

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12 Answers

You need to include all the points which are required to be incorporated by you in interest of your property. Secondly every year there should be appreciation of rent by 10 percent of market value which ever is more.

Prashant Nayak
Advocate, Mumbai
27289 Answers
88 Consultations

4.4 on 5.0

Don’t enter into agreement fir 29 years

2) enter into agreement fir maximum 10 years or so

3) there should be termination clause in the contract

4) further renewal of lease should be with mutual consent of parties

Ajay Sethi
Advocate, Mumbai
87973 Answers
6207 Consultations

5.0 on 5.0

29 years of lease is long period and if the pump is not leased to meaning theeeby you are not dealer it's not profitable to rent a such valuable land.

Also see the clause like arbitration clause petrol companies draft this in there favour, rent clause, incriment every year, deposite of handsome amount as security, termination clause, donot enter if there is lock in period.

Ask company for dealership if they are not giving it to you the renting is not profitable negotiate on that.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

Ypu can seek help from an financial advisor or business expert to learn in details about the profitability.

If you are interested to lease then hire the best attorney who will help you to create a binding agreement, which will help you to negotiate with the company on rent agreement including increments in rentals considering inflation and property valuation in future.

Moumita Mitra
Advocate, Kolkata
366 Answers
1 Consultation

4.0 on 5.0

Hello,

Yes it would be profitable and you should enter into the agreement in presence of your local lawyer .

Regards.

Swarupananda Neogi
Advocate, Kolkata
2941 Answers
6 Consultations

4.7 on 5.0

Dear Client,

The major terms of petrol station leases are the same as any other lease and cover standard leasing issues such as:

• Rent payments and rent review amounts and procedures;

• Length of lease and whether there are any rights to further terms;

• General obligations of the tenant to repair and maintain the premises during the term;

• Tenant’s rights to assign or transfer its interest in the lease;

• Terms detailing what happens in the event the premises is damaged or destroyed (such as the tenant’s right of termination, abatement of rent, money payable);

• Indemnities and releases;

• How the lease ends and obligations upon termination or expiry of the lease.

Don`t get confuse with inflation and property valuation, as with petrol pump includes the service station business, the petrol tanks kept underground, and the petrol pumps located outside the service station shop which will diminishes the value of property as contaminated land.

So, instead include clause of yearly increase in rent by 5 % and after three/ five years, increase acc to accumulated last sum on 3/5 years.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

This is purely your decision to lease out the property.

You case discuss the pros and cons with a consultant locally since this involves lot of things besides lease agreement.

In fact this lease agreement is to be entered with a person who is taking the dealership on the basis of reserved quota, hence at a later stage when you would require to restore the land on termination/conclusion of lease period, you should not face a different type of problem that may give way to communal problems.

A proper lease agreement keeping in view about the future inflation, you may determine the rental amount and its periodical escalation/enhancement.

If in case it is necessary you may have to enter into a tripartite agreement also along with the petroleum company besides the lessee.

You may take the assistance of a consultant in the local if need be.

T Kalaiselvan
Advocate, Vellore
78131 Answers
1543 Consultations

5.0 on 5.0

Since the petroleum companies maintain lethargic attitude once the contract or leas agreement is terminated because to find a new dealer and new place it involves a lot of procedural hazards and they are very tedious and fatigue.

You may have to enter into a tripartite agreement with the dealer and the petroleum company.

The consultants on the subjects like this are rarely to be found, you may find one in a big and major towns, hence you may have to take the advise of the locally available CA or any advocate who is well versed in such dealings.

The lease period will naturally be for a very long period because installation of petrol pump is not a easy task, it cannot be installed in different places every often.

There are lot of authorities involved in it for example high ways authorities, fire and safety department, local municipal authority, etc.

T Kalaiselvan
Advocate, Vellore
78131 Answers
1543 Consultations

5.0 on 5.0

dont give your premises on lease for 29 years

2) further the agreement would be arbitrary , one sided and completely in favour of petroleum company

3) further as stated by you even if lease period is over companies are not transferring the petrol stand land to owners .

Ajay Sethi
Advocate, Mumbai
87973 Answers
6207 Consultations

5.0 on 5.0

Sometimes it is better to seek help from financial advisor or business expert because they can give you an idea about the future aspects of any business or investment. Legal help can be provided when there is a violation of any right.

Moumita Mitra
Advocate, Kolkata
366 Answers
1 Consultation

4.0 on 5.0

See its always necessary to seek the valuation of property in future and your gains from the said lease because the same piece of land can be more valuable and people end up giving it on long leases so for that you need a local Advocate/ Financial Advisor to give you advise regarding the comparison of profit from lease or future use.

Also In my advise when you are not dealer himself just for rent you should not lease out your land as these companies take up land and then there are issues with dealer (sometimes) then the land owner has to suffer as the agreements are always in favour of company and there are long drawn litigation to take land back, also sometime there are arbitrary arbitration clauses.

See in these long term lease you cannot simple throw company out of if it is not willing to there has to be suit for eviction and which again consume time and cost.

And Since your property is so valuable I wont advice you to lease it to company if it is not ready to give you dealer ship keep your land you will get better prospects from other oil companies if you have that sound location or you can yourself try with other companies you will get the dealership.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

U can contract for draft agreement.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

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