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

This post has actually been published by Abanti Bose.

Table of Contents

What is a rental contract?
Importance of a rental agreement
Duration of rental contracts
Procedure for registering a rental agreement
Documents required for a rental agreement
Registration charges
Important provisions of a rental agreementName of the residents
Duration of the tenancy
The rental quantity
Cost of duration or maintenance
Cost of down payment
Terms
Renewal and notice period
Amenities connected with the residential or commercial property
Exit provision
Signature and date
Police confirmation


What is a rental contract?

A rental arrangement is an essential legal document that needs to be signed by both the celebrations i.e., the property owner and the occupant, in order to regulate the tenancy. It contains all the comprehensive info about the celebrations and the conditions connected to the tenancy of the residential or commercial property on rent. It is binding upon both parties. It consists of all fundamental elements such as rent, down payment, details relating to the residential or commercial property, its size, address, type, and most importantly duration of the contract. Since it is binding in nature, both parties are recommended to go through it thoroughly before finalizing and consenting to the clause. The contract remains void till two witnesses or non-beneficiaries are present and sign the arrangement as witnesses.

The rental arrangement is mainly prepared by either of the celebrations with the authorization of the other party and both the celebrations need to consent to the same. A rental agreement might be either oral, composed, or indicated. However, it is normally preferred to have a written contract as that might be practical as a piece of evidence for mutual consent of the celebrations. The conditions of the agreement can not be amended unless and till parties mutually consent to it.

Importance of a rental contract

The rental arrangement being a legal document plays an extremely important function. A Rental agreement safeguards the rights of both parties and conserves them from future disagreements. During the agreement between landlord and renter, there may occur some conflicts between them. Such disagreements could be fixed through the arrangement. It supplies security to the property manager for his residential or commercial property and likewise secures renters from illegal needs of the property owners.

The rental contract also offers ownership of the residential or commercial property to the occupant for a specified time period. Oral agreements are not imposed by law for that reason it is always recommended to carry out a written arrangement. Another essential aspect is it acts as a piece of legal evidence.

Duration of rental agreements

Rental agreements can be repaired for any period based on the requirements of the parties and can be restored according to the terms of the arrangement. However, when it comes to a rental arrangement, it's normally for 11 months. This is to avoid the strict rental law which is applicable for the lease arrangement approximately 12 months. According to the Registration Act, 1908, any residential or commercial property that is leased out to the renter for more than 11 months needs to be registered. Hence, the residential or commercial property that lasts only or for less than 11 months does not need registration.

When it comes to a lease arrangement, the parties require to pay stamp duty, registration charges, and other expenses. Therefore, to be exempt from such expenses, the parties in the rental arrangements mutually execute the contract for 11 months in which one month in the count of 12 months is thought about as the month of the notice served by the owner.

Procedure for registering a rental arrangement

Registration of rental agreements is elective. However, it is helpful in case of conflicts as notarized arrangements are not applicable in the court of law. Therefore, it is constantly much better to be registered.

One can sign up the rent arrangement by going to the close-by sub-registrar's office. It is essential to keep in mind that the procedure of registration must be completed at least 4 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 expires, then a fresh deed requires to be produced. 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 celebrations is present and not both of them, then today party needs to sign the Power of Attorney, granting the rights of agreement closure.

Documents needed for a rental arrangement

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 celebrations and one copy of each of the witnesses.
4. Documents associated with resolve evidence of both the parties 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 varies from one state to another. It likewise includes stamp task charges.

Important provisions of a rental agreement

Name of the occupants

Name of the residents includes all individuals residing on the residential or commercial property. Such names specifically must can taking duty for the residential or commercial property. These names might be helpful in case any dispute arises. For instance, if any renter unexpectedly leaves your house without informing 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 have to mention the set period in the arrangement. After the expiration of the period, it can be renewed with the recommended rule by shared permission of the celebrations. Mentioning the period of the occupancy in the rental arrangement can keep the owner on the safer side. It also protects the renter as the owner can not force them to abandon the residential or commercial property before the due date.

The rental quantity

The amount of the amount repaired for the rent should be defined in the rental agreement. It needs to also consist of the amending terms. This stipulation 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 discussed in the arrangement. This clause safeguards the celebrations from the illegal holding of the cash or payment of the cash.

Cost of period or maintenance

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 quantity needs to be mentioned particularly in the contract. Not only the cost of upkeep but also any other expenditures that might be significant or small such as repairs or electrical expenses, and so on ought to be covered within the rental arrangement. This gives clarity about such elements to both celebrations throughout the occupancy period.

Cost of security deposit

The amount that needs to be paid by the tenant to the property owner need to be mentioned in the rental agreement and should be signed by both celebrations. This saves both the celebrations from unlawful demand and allegations. The property owner can also be eased in the event where the occupant leaves the residential or commercial property without making the payment of rent.

Conditions

The arrangement should consist of how the residential or commercial property and its surroundings must be dealt with. Factors such as subletting, alteration in the properties, allowing of the animals, etc must be cleared in the arrangement.

Renewal and notification duration

The renewal and notification periods need to be appropriately discussed 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 requires to be performed.

Amenities attached with the residential or commercial property

It includes all the other amenities that are connected to the residential or commercial property. This needs to be pointed out in the arrangement for the security of the landlord and his residential or commercial property. It also includes the current condition of the residential or commercial property for future referral. This assists the landlord to prevent any damages or the financial settlement of any repairs throughout the occupancy duration.

Exit stipulation

This provision consists of clearance of any other penalties before the termination of the arrangement or before the leaving of the residential or commercial property need to be fixed.

Signature and date

This is the most crucial provision of the rental contract. In this, both the tenant and the property owner agree to all the terms of the contract and accept the agreement by signing this document. It also guarantees that failure in compliance with the agreement caused deal with legal penalties by either of the celebrations. Before signing the agreement it is very important to read every stipulation of the agreement thoroughly.

Police confirmation

The significant aspect of any rental arrangement is the cops confirmation of the renter. This consists of a background check of the renter to avoid any kind of unlawful activity from utilizing the residential or commercial property. It not just ensures the security 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 typically observed that the parties make the following errors in the rental agreement:

1. Do not discuss the terms which may result in the expulsion of the tenant.
2. Does not define the lock-in duration and termination. Lock-in period i.e. the minimum period till which the occupant can not vacate the residential or commercial property. The occupant needs to also specify priorly the notice duration which needs to be sent before ending the agreement.
3. Ignores to specify the sum of money that requires to be paid as rent, fixing 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 arrangement.

RENTAL AGREEMENT

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

AND

... ... ... ... (Name of tenant), hereinafter described as the tenant, or the 2nd celebration, address ... ... ... ... ...( residential address of the tenant)

The term Landlord and the tenant shall mean and also include their legal heirs, followers, appoints, agents, etc.

Whereas the first party is the owner and in the ownership of the residential or commercial property No: ... ... ... ... ... ... (address of the rented residential or commercial property) and has actually consented to discharge the stated residential or commercial property to the second party for a month-to-month lease of Rs. ....../- (in words) monthly.

Now this lease arrangement is experienced under:

1. The occupancy is according to the English calendar and the contract is starting from ......( date of start of contract).
2. The rent arrangement is approved for the period of 11 (eleven-month) beginning with ... ...( date of beginning), and the agreement can be extended even more with the mutual consent of the celebrations.
3. The function of the tenancy is simply for property functions and will not be utilized for any other purpose.
4. The 2nd party will have to pay Rs. ... .../- (in words) as month-to-month rent, which must be paid between 1st to 5th day of every month, and if the renter continues to remain after 11 months from the beginning date, the rent will be increased.
5. The 2nd shall pay the electricity and water charges independently according to their consumption to the very first party.
6. The 2nd celebration should not sublease the residential or commercial property to the sub-tenant under any situations without the consent of the proprietor.
7. The 2nd party shall abide by all the guidelines and regulations, by-laws set by the regional authorities in regard of the rented residential or commercial property and will not get included or do unlawful 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 premises either significant or minor without the permission of the property owner.
9. The 2nd celebration will need to enable the landlord or his authorized agent to participate in leased properties for its examination or basic monitoring for any repair work if needed.
10. The 2nd celebration will bear the cost of day-to-day minor repairs.
11. This arrangement might be revoked or ended before the expiry of this tenancy duration by serving a one-month prior notification.
12. Both the celebrations have actually checked out and understood this contract and have consented to sign the same with no pressure from any side.
In WITNESS WHEREOF the landlord and the occupant have their hand at ______ (place) on this the _____________ (date of rent agreement) year first above discussed in the presence of the following witnesses.

Witnesses:

1.

2.

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

Model Tenancy Act, 2021

To offer a consistent policy in India in regards to rental housing, the Model Tenancy Act, 2021, was enacted by the central federal government. The primary objective of this Act is to govern the rental housing market, like property and industrial properties, by establishing standards for occupancy, rights, and responsibilities of the proprietors and occupants and resolutions for the disputes arising out of the occupancy. This Act uses to the whole of India consisting of all the states and union areas. According to this Act, the arrangement must remain in written form and both the parties must sign the arrangement. The rental contract should consist of all the relevant conditions which would be binding on both parties.

The existing lease contract will remain outside the province of the model tenancy law, as it is still progressive and will not have a retrospective effect. This Act considers all the rental contracts that include leasing residential and business residential or commercial properties. However, the agreement prepared should be for more than 11 months. An agreement of approximately 11 months is not covered under this Act. This eventually implies that the property manager and the renter can not look for resolution under the guidelines of the Act in case of any conflicts.