This short article is composed by Niharika Agrawal, from IFIM Law School. This short article deals with all the basics of a legitimate rental arrangement and its format.

This post has been published by Abanti Bose.

Tabulation

What is a rental contract?

Importance of a rental contract

Duration of rental arrangements

Procedure for signing up a rental contract

Documents needed for a rental contract

Registration charges

Important clauses of a rental agreementName of the occupants

Duration of the tenancy

The rental quantity

Cost of period or upkeep

Cost of down payment

Conditions

Renewal and notice period

Amenities connected with the residential or commercial property

Exit stipulation

Signature and date

Police confirmation

What is a rental agreement?

A rental agreement is a crucial legal document that requires to be signed by both the parties i.e., the property manager and the renter, in order to control the tenancy. It contains all the detailed information about the parties and the conditions connected to the occupancy of the residential or commercial property on lease. It is binding upon both celebrations. It consists of all standard elements such as rent, down payment, information concerning the residential or commercial property, its size, address, type, and most significantly duration of the contract. Since it is binding in nature, both celebrations are advised to go through it thoroughly before signing and agreeing to the clause. The agreement remains invalid until 2 witnesses or non-beneficiaries are present and sign the contract as witnesses.

The rental contract is primarily drafted by either of the parties with the authorization of the other party and both the celebrations have to consent to the very same. A rental arrangement might be either oral, written, or indicated. However, it is usually chosen to have a written contract as that could be valuable as a piece of evidence for shared permission of the celebrations. The terms of the contract can not be amended unless and till parties equally consent to it.

Importance of a rental agreement

The rental agreement being a legal document plays a really crucial role. A Rental contract safeguards the rights of both parties and conserves them from future conflicts. During the contract between property owner and tenant, there may emerge some conflicts in between them. Such conflicts might be fixed through the arrangement. It offers security to the property manager for his residential or commercial property and likewise secures occupants from illegal demands of the landlords.

The rental arrangement also gives ownership of the residential or commercial property to the renter for a specified duration of time. Oral agreements are not implemented by law for that reason it is constantly recommended to perform a written agreement. Another essential factor is it functions as a piece of legal evidence.

Duration of rental agreements

Rental agreements can be fixed for any duration according to the needs of the parties and can be restored according to the regards to the contract. However, when it comes to a rental arrangement, it's normally for 11 months. This is to avoid the stringent rental law which is applicable for the lease arrangement as much as 12 months. According to the Registration Act, 1908, any residential or commercial property that is leased out to the tenant for more than 11 months needs to be registered. Hence, the residential or commercial property that lasts just or for less than 11 months does not require registration.

In the case of a lease arrangement, the parties require to pay stamp responsibility, registration charges, and other costs. Therefore, to be exempt from such costs, the parties in the rental contracts mutually perform the agreement for 11 months in which one month in the count of 12 months is considered as the month of the notification served by the owner.

Procedure for signing up a rental contract

Registration of rental agreements is not mandatory. However, it works in case of conflicts as notarized arrangements are not relevant in the law court. Therefore, it is constantly better to be signed up.

One can sign up the lease arrangement by going to the nearby sub-registrar's workplace. It is essential to note that the procedure of registration should be finished a minimum of four months before the date of expiration of the deed. Therefore, one requires to track the date and time when the deed was produced. Once the deed ends, then a fresh deed needs to be developed. After this, a fresh deed has actually to be produced. Both the celebrations need to be present in addition to two witnesses for attestation. If only among the parties is present and not both of them, then the present celebration needs to sign the Power of Attorney, giving the rights of agreement closure.

Documents required for a rental agreement

1. Original proof of ownership of the residential or commercial property.

2. Residential or commercial property documents such as tax invoices.

3. Two passport photos of each of the parties and one copy of each of the witnesses.

4. Documents connected to deal with proof of both the celebrations and witnesses.

5. Route map of the residential or commercial property that needs to be rented.


Registration charges

There are no set registration charges in the whole nation. It differs from one state to another. It likewise consists of stamp duty charges.

Important provisions of a rental agreement

Name of the occupants

Name of the occupants consists of all individuals surviving on the residential or commercial property. Such names particularly must be capable of taking obligation for the residential or commercial property. These names might be beneficial in case any disagreement arises. For instance, if any occupant all of a sudden leaves your home without informing the owner. In such cases, the owner has the power to take legal actions versus any of the tenants in absence of the other.

Duration of the occupancy

The parties have to mention the fixed period in the contract. After the expiration of the period, it can be restored with the recommended rule by shared authorization of the celebrations. Mentioning the period of the tenancy in the rental arrangement can keep the owner on the much safer side. It also safeguards the tenant as the owner can not require them to vacate the residential or commercial property before the due date.

The rental amount

The sum of the quantity fixed for the rent must be specified in the rental contract. It must likewise contain the modifying terms. This clause likewise consists of the mode of payment and the instalment system if any. The dates at which the lease requires to be paid, the fine for late payment, and so on likewise needs to be pointed out in the contract. This provision secures the celebrations from the illegal holding of the money or payment of the money.

Cost of period or maintenance

In many cases, the expense of the upkeep is paid either by the owner or the occupant. Such amount of payment and the person paying the amount should be mentioned specifically in the arrangement. Not only the expense of upkeep however also any other costs that might be significant or small such as repairs or electric expenses, and so on need to be covered within the rental agreement. This provides clarity about such elements to both celebrations throughout the occupancy period.

Cost of security deposit

The quantity that requires to be paid by the tenant to the property owner need to be mentioned in the rental arrangement and needs to be signed by both celebrations. This conserves both the celebrations from unlawful demand and allegations. The landlord can also be eliminated in the event where the renter vacates the residential or commercial property without making the payment of lease.

Conditions

The arrangement needs to consist of how the residential or commercial property and its environments must be dealt with. Factors such as subletting, modification in the facilities, allowing of the animals, and so on need to be cleared in the arrangement.

Renewal and notice duration

The renewal and notification durations ought to be appropriately discussed in the contract for the sake of anticipation. It includes the date of renewal of the arrangement and the notification duration and how it needs to be performed.

Amenities attached with the residential or commercial property

It consists of all the other amenities that are connected to the residential or commercial property. This requires to be mentioned in the contract for the security of the property owner and his residential or commercial property. It likewise consists of the most recent condition of the residential or commercial property for future referral. This assists the landlord to avoid any damages or the financial settlement of any repairs during the tenancy period.

Exit stipulation

This clause consists of clearance of any other charges before the termination of the agreement or before the leaving of the residential or commercial property need to be fixed.

Signature and date

This is the most important clause of the . In this, both the tenant and the proprietor accept all the terms of the arrangement and accept the contract by signing this document. It also ensures that failure in compliance with the agreement led to face legal charges by either of the celebrations. Before signing the agreement it is really important to read every clause of the contract carefully.

Police confirmation

The major aspect of any rental agreement is the cops confirmation of the renter. This consists of a background check of the occupant to avoid any sort of illegal activity from utilizing the residential or commercial property. It not just ensures the safety and security of the residential or commercial property however also the neighbourhood. Non-compliance with this clause of the arrangement is punishable under Section 188 of the Indian Penal Code.

Common errors in a rental contract

It is usually observed that the celebrations make the following mistakes in the rental arrangement:

1. Do not point out the terms which may lead to the eviction of the renter.

2. Does not define the lock-in period and termination. Lock-in duration i.e. the minimum duration till which the occupant can not abandon the residential or commercial property. The occupant needs to also specify priorly the notice duration which needs to be submitted before terminating the agreement.

3. Ignores to define the amount of money that needs to be paid as lease, repairing charges, and the mode of payment.

4. Ignore the provision connecting to subletting of the residential or commercial property.

5. Does not discuss the information connected to the Power of Attorney.


Format

This is the basic format of the rental agreement.

RENTAL AGREEMENT

This rent agreement is made on ... ...( date) between ... ......( name of the proprietor) S/o ... ... ...( father's name of the proprietor), Address ... ... ...... (domestic address of the landlord). Hereinafter described as the proprietor or the very first celebration.

AND

... ... ... ... (Name of occupant), hereinafter referred to as the renter, or the 2nd party, address ... ... ... ... ...( property address of the occupant)

The term Landlord and the occupant will suggest and also include their legal beneficiaries, followers, assigns, representatives, and so on.

Whereas the first celebration is the owner and in the possession of the residential or commercial property No: ... ... ... ... ... ... (address of the rented residential or commercial property) and has actually accepted discharge the said residential or commercial property to the 2nd party for a monthly lease of Rs. ....../- (in words) per month.

Now this lease agreement is experienced under:

1. The tenancy is according to the English calendar and the agreement is commencing from ......( date of commencement of contract).

2. The lease agreement is granted for the duration of 11 (eleven-month) beginning with ... ...( date of commencement), and the contract can be extended even more with the shared authorization of the parties.

3. The purpose of the occupancy is simply for property purposes and will not be used for any other function.

4. The 2nd party will need to pay Rs. ... .../- (in words) as regular monthly rent, which should be paid in between 1st to 5th day of each month, and if the occupant continues to stay after 11 months from the starting date, the rent will be increased.

5. The 2nd shall pay the electricity and water charges separately according to their consumption to the first celebration.

6. The second celebration should not sublease the residential or commercial property to the sub-tenant under any circumstances without the approval of the proprietor.

7. The 2nd party will comply with all the guidelines and policies, by-laws set by the regional authorities in respect of the rented residential or commercial property and will not get included or do prohibited activities in the rented residential or commercial property.

8. The second party will refrain from doing any construction or make any alteration in the leased properties either significant or minor without the authorization of the landlord.

9. The second party will have to allow the proprietor or his authorized representative to get in into leased premises for its evaluation or basic monitoring for any repair if needed.

10. The second celebration will bear the expense of daily minor repairs.

11. This agreement could be withdrawed or terminated before the expiry of this tenancy period by serving a one-month prior notice.

12. Both the celebrations have read and comprehended this arrangement and have concurred to sign the exact same with no pressure from any side.


In WITNESS WHEREOF the property manager and the renter have hereunto subscribed their hand at ______ (place) on this the _____________ (date of rent contract) year first above mentioned in the existence of the following witnesses.

Witnesses:

1.

2.

___________ (name of the proprietor) _________________ (name of the tenant)

Model Tenancy Act, 2021

To supply an uniform regulation in India in terms of rental housing, the Model Tenancy Act, 2021, was enacted by the central government. The main objective of this Act is to govern the rental housing market, like domestic and commercial facilities, by establishing standards for occupancy, rights, and tasks of the property owners and renters and resolutions for the disagreements emerging out of the occupancy. This Act uses to the whole of India including all the states and union areas. According to this Act, the agreement needs to be in written form and both the celebrations ought to sign the agreement. The rental agreement needs to include all the appropriate conditions which would be binding on both parties.

The existing lease agreement will stay outside the purview of the model tenancy law, as it is still progressive and will not have a retrospective impact. This Act considers all the rental agreements that involve leasing property and commercial residential or commercial properties. However, the agreement drafted should be for more than 11 months. An agreement of approximately 11 months is not covered under this Act. This eventually means that the property owner and the renter can not seek resolution under the rules of the Act in case of any disputes.