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What is a Rental Agreement?
A rental agreement is an essential document signed between tenants and landlords that states the essential terms for renting a property. In general, a rental agreement has all the essential details and information like monthly rent, security deposits, information on property, like type, size, and address. Most importantly, the duration of the agreement is also mentioned in the document.
In simple terms, a rental agreement makes sure that the landlord and tenants are on the same page regarding tenancy. It states and establishes the right of both the parties to avoid any complications and disputes in the future.
Why Rental Agreement is Important?
There are various reasons that state why rental agreements are important. A few of those reasons are,
- Rental agreement stands out as a legally recognized document which can be used as evidence for any discripencies in the future.
- It also helps in the recovery of unpaid rent and offers basis for any legal actions.
- A well-drafted rental agreement facilitates smooth financial transaction between the tenant and the owner.
- The framework of the rental agreement protects the rights of both the landlords and tenants.
- Rental agreement offers provisions for a wide range of possible scenarios from pre-existing damages to maintaining the property in the best possible conditions.
Different Types of Rental Agreement in India
1. A Rental Agreement for Eleven Months
In India, this kind of renting arrangement is very common. In order to get around some regulatory requirements specified in the Indian Stamp Act, a property rental agreement typically has a set duration of 11 months. These agreements are preferred because to their simplicity and shorter commitment period, and they do not require registration. Options include the agreement’s extension, termination, or renewal at the end of the period.
2. Extended-Duration Lease Contract
These leases, which typically last one to three years, must be registered with the appropriate government agency in order to guarantee legal compliance. Extended plot leases are becoming more common in the Chennai area as a result of people and families looking for stable, long-term housing, particularly those with kids enrolled in respectable schools.
3. Agreement on Commercial Leases
Offices, stores, and industries can be rented out under commercial leases. Because it takes a lot of money to build up these venues, they often stay longer, three to five years. Unlike standard rental agreements, these leases in India must be registered as they are longer than 11 months. To ensure that everything is protected by law, they have more specific terms and conditions.
4. An Agreement to Rent to Own
Tenants might lease a property with the option to purchase it at the conclusion of the rental term thanks to these agreements. The conditions include the length of the rental, the purchase price, and a portion of the rent that goes toward the purchase price.
5. Fulfilling the Guest Agreement
The PG trend is especially common in Indian metropolises like Bangalore, Chennai, and Mumbai, which provide a lot of possibilities for housing students and working professionals while yet providing easy access inside the city. A completely furnished room with utilities and food paid is often provided to the renter (paying guest). This kind of agreement specifies the facilities, terms of payment, and house rules.
6. Agreement on Leave and License
It’s a preferred choice over traditional leases in Tamil Nadu, especially in places like Chennai. This agreement gives the renter the right to use the space for a set period of time, usually up to three years, but it does not give them any ownership of the property. As a typical rental contract, a leave and license agreement offers more flexibility and expedited eviction proceedings, which is beneficial to landlords.
How to Draft a Rental Agreement?
Drafting Rental Agreement is made easy with few simple steps.
Step 1: Collect all the necessary information about the property. This will simplify for the process in the long run.
Step 2: Finalize the terms and conditions of the rental agreement. It includes factors like security deposit, rental amouont, period of stay, and more.
Step 3: Draft the rental agreement with all the essential details which includes rental clauses and conditions.
Step 4: Review the draft infront of both the parties and make sure the terms and conditions mentioned in the agreement is okay with them. If needed make the necessary changes, update, and finalize the agreement.
Step 5: Take a print out of the rental agreement and sign it infront of a witnesses. Both the tenant and the landlord should sign the agreement.
Step 6: Legally register the rental agreement with the approval of the local authorities.
Documents Required to Draft a Rental Agreement
The registration of rental agreement requires various documents. Some of those significant documents are as follows,
- Original documentation proving the property’s ownership or title. This might be any document that certifies the landlord is the property’s legitimate owner, such as a sale or lease deed.
- Documentation pertaining to the property to be rented, such as the tax receipt or Index II.
- Each party has two photos, and each witness has one photo.
- Copies of the parties’ and witnesses’ proof of address. Passports, Aadhaar cards, ration cards, bank passbooks, and driver’s licenses can all be used as evidence of address.
- The leased property’s route map.
- The acceptable value of stamp paper. From one state to another, different stamp duties are required for rental agreements. The website of the Ministry of Finance allows you to view the stamp duty rates for your state.
- Fee for registration. The sub-registrar’s office is also responsible for receiving the registration money. States differ in the amount of the registration fee.
Stamp Duty on Rental Agreements
The stamp duty charges for your rental agreement will vary based on the city . It is essential to check the official government website to know the exact stamp duty charges.
Frequently Asked Questions
1. Who drafts a rental agreement?
Usually the landlord drafts the rental agreement and keep the original copy. However, if the tenants require a copy they can always ask the landlord. It is also significant to know that a tenant can also draft a rental agreement and it is totally valid.
2. What are the three significant types of rental agreements in India?
There are three significant types of rental agreement available in India. They are rent agreement, lease agreement, and leave and license agreement.
3. What is the validity of rental agreements in India?
The validity of a rental agreements in India is 11 months. This agreement is valid in court and can be considered as a evidence.
4. Is it possible to modify the terms and conditions of a rental agreement in India?
Yes, it is possible to modify the terms and conditions of a rental agreement in India with a mutual consent from both the tenants and landlords.