This article is composed by Niharika Agrawal, from IFIM Law School. This short article offers with all the essentials of a valid rental agreement and its format.

This article has actually been released by Abanti Bose.

Tabulation

What is a rental arrangement?

Importance of a rental agreement

Duration of rental contracts

Procedure for signing up a rental agreement

Documents required for a rental arrangement

Registration charges

Important clauses of a rental agreementName of the occupants

Duration of the occupancy

The rental amount

Cost of period or maintenance

Cost of down payment

Terms

Renewal and notification period

Amenities attached with the residential or commercial property

Exit clause

Signature and date

Police verification

What is a rental arrangement?

A rental arrangement is an important legal file that requires to be signed by both the parties i.e., the proprietor and the tenant, in order to regulate the tenancy. It includes all the in-depth info about the parties and the terms and conditions associated with the occupancy of the residential or commercial property on lease. It is binding upon both parties. It consists of all basic factors such as lease, security deposit, details regarding 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 recommended to go through it carefully before signing and consenting to the clause. The arrangement remains invalid until two witnesses or non-beneficiaries exist and sign the contract as witnesses.

The rental arrangement is generally drafted by either of the parties with the permission of the other party and both the celebrations need to consent to the very same. A rental arrangement could be either oral, written, or suggested. However, it is typically preferred to have a written agreement as that might be useful as a piece of evidence for shared authorization of the celebrations. The terms of the contract can not be modified unless and till celebrations equally agree to it.

Importance of a rental agreement

The rental arrangement being a legal file plays a very important function. A Rental arrangement safeguards the rights of both celebrations and saves them from future disputes. During the agreement in between property owner and renter, there might develop some conflicts in between them. Such disagreements might be solved through the agreement. It offers security to the landlord for his residential or commercial property and also secures renters from illegal needs of the property owners.

The rental arrangement likewise provides ownership of the residential or commercial property to the occupant for a given duration of time. Oral agreements are not implemented by law therefore it is constantly advised to execute a written arrangement. Another important factor is it acts as a piece of legal evidence.

Duration of rental arrangements

Rental agreements can be repaired for any duration as per the needs of the celebrations and can be restored according to the terms of the agreement. However, when it comes to a rental arrangement, it's generally for 11 months. This is to avoid the strict rental law which is applicable for the lease contract approximately 12 months. According to the Registration Act, 1908, any residential or commercial property that is rented 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 need registration.

In the case of a lease arrangement, the parties require to pay stamp task, registration charges, and other expenditures. Therefore, to be exempt from such expenses, the parties in the rental arrangements equally execute the contract for 11 months in which one month in the count of 12 months is thought about as the month of the notification served by the owner.

Procedure for registering a rental arrangement

Registration of rental contracts is elective. However, it is helpful in case of conflicts as notarized arrangements are not appropriate in the court of law. Therefore, it is constantly better to be signed up.

One can register the rent agreement by checking out the neighboring sub-registrar's office. It is very important to keep in mind that the procedure of registration need to be completed a minimum of four months before the date of expiration of the deed. Therefore, one needs to keep track of the date and time when the deed was produced. Once the deed expires, then a fresh deed requires to be developed. After this, a fresh deed needs to be created. Both the parties need to be present together with 2 witnesses for attestation. If only one of the parties exists and not both of them, then today party should sign the Power of Attorney, approving the rights of arrangement closure.

Documents required for a rental arrangement

1. Original evidence 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 associated with address evidence of both the celebrations and witnesses.

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


Registration charges

There are no fixed registration charges in the whole country. It differs from state to state. It also includes stamp duty charges.

Important provisions of a rental arrangement

Name of the residents

Name of the occupants consists of all the individuals living on the residential or commercial property. Such names specifically must be capable of taking duty for the residential or commercial property. These names might be helpful in case any disagreement develops. For instance, if any renter all of a sudden vacates your house without notifying the owner. In such cases, the owner has the power to take legal actions against any of the tenants in lack of the other.

Duration of the occupancy

The celebrations need to discuss the set duration in the agreement. After the expiry of the period, it can be renewed with the prescribed procedure by shared approval of the parties. Mentioning the period of the tenancy in the rental agreement can keep the owner on the more secure side. It also secures the tenant as the owner can not force them to vacate the residential or commercial property before the due date.

The rental quantity

The sum of the quantity repaired for the rent must be defined in the rental contract. It ought to also consist of the changing terms. This stipulation also includes the mode of payment and the instalment system if any. The dates at which the lease needs to be paid, the fine for late payment, and so on likewise needs to be mentioned in the contract. This clause safeguards the celebrations from the illegal holding of the cash or payment of the cash.

Cost of duration or upkeep

In some cases, the expense of the maintenance is paid either by the owner or the tenant. Such amount of payment and the person paying the amount needs to be discussed particularly in the arrangement. Not just the expense of maintenance however likewise any other expenditures that might be major or small such as repair work or electrical costs, and so on ought to be covered within the rental contract. This gives clarity about such elements to both parties during the tenancy period.

Cost of down payment

The quantity that requires to be paid by the renter to the property manager should be pointed out in the rental agreement and must be signed by both celebrations. This saves both the parties from unlawful demand and allegations. The property manager can also be relieved in the event where the renter leaves the residential or commercial property without making the payment of rent.

Terms and conditions

The agreement must include how the residential or commercial property and its environments should be treated. Factors such as subletting, modification in the facilities, enabling of the animals, and so on should be cleared in the arrangement.

Renewal and notice period

The renewal and notification periods ought to be properly pointed out in the agreement for the sake of anticipation. It consists of the date of renewal of the contract and the notice period and how it needs to be performed.

Amenities attached with the residential or commercial property

It includes all the other amenities that are attached to the residential or commercial property. This needs to be discussed in the contract for the security of the landlord and his residential or commercial property. It also consists of the most current condition of the residential or commercial property for future reference. This assists the landlord to avoid any damages or the monetary settlement of any repair work throughout the occupancy period.

Exit stipulation

This provision consists of clearance of any other charges before the termination of the contract or before the leaving of the residential or commercial property must be fixed.

Signature and date

This is the most important stipulation of the rental agreement. In this, both the tenant and the property manager concur to all the conditions of the arrangement and accept the agreement by signing this document. It likewise guarantees that failure in compliance with the contract resulted in deal with legal charges by either of the celebrations. Before signing the contract it is very essential to read every provision of the contract thoroughly.

Police confirmation

The major element of any rental agreement is the police verification of the tenant. This includes a background check of the tenant to prevent any type of illegal activity from utilizing the residential or commercial property. It not only makes sure the safety and security of the residential or commercial property however likewise the area. Non-compliance with this provision of the agreement is punishable under Section 188 of the Indian Penal Code.

Common mistakes in a rental contract

It is generally observed that the parties make the following errors in the rental agreement:

1. Do not discuss the terms which might lead to the expulsion of the renter.

2. Does not specify the lock-in duration and termination. Lock-in duration i.e. the minimum period till which the occupant can not leave the residential or commercial property. The renter needs to likewise specify priorly the notice duration which requires to be submitted before ending the agreement.

3. Ignores to specify the sum of money that needs to be paid as rent, fixing charges, and the mode of payment.

4. Ignore the clause relating to subletting of the residential or commercial property.

5. Does not mention the information associated with the Power of Attorney.


Format

This is the basic format of the rental contract.

RENTAL AGREEMENT

This lease arrangement is made on ... ...( date) in between ... ......( name of the proprietor) S/o ... ... ...( father's name of the property manager), Address ... ... ...... (residential address of the property manager). Hereinafter described as the property manager or the first party.

AND

... ... ... ... (Name of tenant), hereinafter described as the renter, or the second party, address ... ... ... ... ...( property address of the tenant)

The term Landlord and the occupant shall indicate and likewise include their legal beneficiaries, followers, assigns, agents, and so on.

Whereas the very first celebration is the owner and in the belongings of the residential or commercial property No: ... ... ... ... ... ... (address of the rented residential or commercial property) and has actually consented to let out the stated residential or commercial property to the second celebration for a monthly rent of Rs. ....../- (in words) monthly.

Now this rent agreement is experienced under:

1. The occupancy is according to the English calendar and the contract is starting from ......( date of beginning of contract).

2. The rent agreement is approved for the duration of 11 (eleven-month) beginning with ... ...( date of start), and the agreement can be extended even more with the shared consent of the celebrations.

3. The purpose of the tenancy is simply for domestic purposes and will not be utilized for any other purpose.

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

5. The 2nd shall pay the electrical energy and water charges independently according to their usage to the first party.

6. The second party ought to not sublease the residential or commercial property to the sub-tenant under any situations without the permission of the property manager.

7. The 2nd celebration will stick to all the guidelines and regulations, by-laws set by the local authorities in regard of the rented residential or commercial property and will not get included or do illegal activities in the leased residential or commercial property.

8. The 2nd party shall refrain from doing any building or make any modification in the rented properties either major or small without the consent of the proprietor.

9. The second party will have to allow the property manager or his authorized representative to participate in leased facilities for its inspection or basic checking for any repair work if required.

10. The second celebration will bear the cost of everyday small repairs.

11. This contract could be withdrawed or ended before the expiration of this tenancy duration by serving a one-month previous notice.

12. Both the parties have read and comprehended this contract and have accepted sign the exact same without any pressure from any side.


In WITNESS WHEREOF the property owner and the occupant have actually hereunto subscribed their hand at ______ (location) on this the _____________ (date of lease contract) year first above mentioned in the existence of the following witnesses.

Witnesses:

1.

2.

___________ (name of the property manager) _________________ (name of the occupant)

Model Tenancy Act, 2021

To provide a consistent policy in India in regards to rental housing, the Model Tenancy Act, 2021, was enacted by the central federal government. The main goal of this Act is to govern the rental housing market, like residential and commercial premises, by developing standards for occupancy, rights, and duties of the property owners and renters and resolutions for the disputes emerging out of the tenancy. This Act uses to the entire of India including all the states and union territories. According to this Act, the contract must be in written form and both the celebrations ought to sign the arrangement. The rental arrangement should consist of all the relevant terms which would be binding on both celebrations.

The existing lease contract will stay outside the province of the model occupancy law, as it is still progressive and will not have a retrospective result. This Act thinks about all the rental agreements that involve renting residential and commercial residential or commercial properties. However, the contract prepared need to be for more than 11 months. An agreement of up to 11 months is not covered under this Act. This eventually means that the landlord and the renter can not seek resolution under the rules of the Act in case of any disputes.