Is this Usury?

Question

Two stores on a street...all things equal and right next to each other...same size, parking, etc.

Each store's rent is $1000 per month with a one year lease. After a year the first store is doing fantastic. The second store is not doing well but survives.

The landlord surmizes that the first store is doing 3x better than the second and decides it will be $3000 for the first store to renew the least and $900 for the second store.

Is this usury?

What is the difference whether it's charging a fee for a loan (the use of money) or charging a fee for a retail location (the use of a physical space)?

Answer 1

Usury can be ANY interest or fee. Or it can be an exorbitant fee. So in either case, I suppose it is usury. But it can techincally be used for both stores.

Answer 2

Most states have either abolished the usury laws or raised the cieling so high for all intents the law is no longer applicable for any practical uses.

But either way, this is not usury. Usury only applies to the act of lending money and charging an exorbitant amount of interest.

It is not uncommon for commercial properties to have their rents tied to the sales of the tennant. Example: Most all stores located in shopping malls pay $X per month PLUS X% of sales. The more they sell the more they pay in rent.

In your example, the tennant needs to evaluate if 3X the rent is a bigger deal than relocating. If he is making 5X more in sales than when he started than, even though it sucks, it might make financial sense to just pay the increase and stay put.

The landlord must also be careful playing this game. If the tennant does not renew the lease and moves, the landlord will have to incure cleaning, maint, advertising and an empty property for several weeks or months of no income.

Disclaimer: I'm not an attorney and this is not legal advice. Only my $0.02 worth of opinion.

Answer 3

This is not usury. The landlord is entitled to increase his rent or ask you to vacate, as it appears your lease agreement is for a period of 1 year. In fact I would think the landlord is quite fair and understanding. You have the option to switch stores with the lesser store. But considering that you may have put in a lot of hard work to bring up your store while the other store has not exercised your quantum of effort. All you can do is mediate and settle for a lesser amount. Or the other option is to go to court, drag the case for as much time as you can and then depending on the verdict of the court either pay or vacate. You have your options.

Answer 4

Usury? No. Usury typically is in reference to charging excessive interest on loans.

The situation you describe is certainly a demonstration of unethical business practice IMO, but hardly illegal.

Answer 5

Free market supply and demand. Loan fees are regulated by the governments (state and federal); a free market economy decides the worth of a rental property.

Answer 6

I'ts walking the line yes but the landlord is allowed to charge whatever he wants for rent. The rule of thumb is whatever the market will bear. But still it's his and and that's that.