Rental Agreement Lawyers

What is a Rental Agreement?

A rental agreement is a legal document which binds the owner of a property and the tenant of the same, in a contract with respect to- the cost of rent that is to be paid by the tenant; the date by which the rent should be deposited; the amount of security deposit to be deposited; and other terms and conditions related to the use of the property, as the property is being rented by the tenant for a specified time period.

Without the existence of such agreement, the landlord of the property in question can find themselves in a fix in any legal dispute, owing to the lack of any legal evidence to prove their claims. Rental agreements are drafted to protect the rights of the owner of a property in case of any legal disputes and to give them the ability to evict tenants, as well as to provide the tenants with the needed security.

What is the use of a Rental Agreement?

Those of us who have taken a property on rent or rented out a property, are aware of the complications that can arise during the course of tenancy. In order to secure the interests of the tenant as well as the landlord, having a rental agreement drafted and registered is vital. For example, what if your landlord suddenly decides to increase the rent due from next month onwards? Or what if the tenant does not pay rent on time or lets in a greater number of people stay on the property premises, than were agreed? Such complications are usually already dealt with, in a rent agreement and are duly signed and agreed on by both the parties.

In cases where there is breach of the said rental agreement, to settle such legal disputes, the cases are applied in civil courts and are covered under the Rent Control Act. Now, the Rent Control Act is such that each stat has its own Act – such as, Rent Control Act (1999) Maharashtra, Rent Control Act (1958) Delhi, Tamil Nadu Buildings (Lease and Rent Control) Act (1960) Chennai.

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Why are most Rent Agreements that of 11 months only, and not more?

The time period of any leasing agreements can range from anything as less as a month to 5 years or more. Most Rent Agreements are signed on for 11 months and if needed, renewed after the lapse of the 11 months, This is done so because, as per the provisions of the Registration Act, 1908, any lease which is made out for 12 months or more, will have to be mandatorily registered – which would involve paying the stamp duty and registration fee. For example, in the case of a lease agreement in Delhi, if the agreement is for 5 years, the stamp paper cost will be 2% of the total average annual rent of a year, with the addition of a fee of Rs. 100, if security deposit is part of the agreement. Simultaneously, the percentage of cost of the stamp duty increases as the time period of the lease increases. Hence, in order to avoid paying the extra cost of the registration process, most Rent Agreements are drafted out to be that of 11 months or less.

While drafting out a rent agreement, there are few fields that are deemed to be mandatory to exist in the agreement.

Any rent agreement is deemed to be incomplete until it does not include the following fields:

Names of the landlord and tenant and/or their agents
Description of the property
Amount of rent and due dates for payment, grace period, late charges
Mode of rent payment
Methods to terminate the agreement prior to the expiration date and charges, if any
Amount of security deposit and the account where it is held
Identification of parking available, including designated parking spaces, if provided
How tenant repair requests are handled and procedures for emergency request
Lock-in period – which is the period of time wherein the tenant cannot vacate the premises before the collapse of a given time period
Renewal of the Agreement

The contents of any Rental Agreement varies from the type of property which is to be rented and the state that the property is in. However, the format for the Rent Agreement remains the same for any rent agreement made for commercial or residential purposes. In order to get a rent agreement registered, it is always suggested to consult expert lawyers in this regard.

Bijlani & Co.