In some cities, instead of a rent agreement, a leave and license agreement is used. By using this form of an agreement, the owner of the property gives you permission to use the house for a specific purpose.
In a Leave and License agreement, the person giving the house on rent is called the licensor and the person renting the house is called a licensee.
Keep in mind the following when you enter into a Leave and License Agreement:
Tenant Protections Not Available to a Licensee
You are technically not a tenant as per law and hence you do not have certain rights. Instead, you are a licensee who has acquired a limited right to use the premises for a specific time period.
Guided by Agreement
The rights and duties of both licensor and licensee are primarily decided by the agreement. If any of the terms of the agreement are violated, it is treated as a violation or breaking of a contract, the remedy for which is going to Court to file a civil suit.
To see a sample leave and license agreement, refer here.
Please refer to this checklist to ensure you have all the essential points covered in your agreement.
The location of your property is one of the main considerations in deciding which court you should approach to file a suit about immovable property(( Under Section 16 of the Civil Procedure Code, suits for various disputes relating to immovable property must be instituted in the Court within the local limits of whose jurisdiction the property is situated)). The court must have jurisdiction over the place where the disputed property is situated. If a property is located across jurisdictional boundaries of more than one court, the suit can be filed in any of those courts(( Section 17 of the Civil Procedure Code)). Please consult a lawyer before taking such steps.
Besides approaching courts, disputes can be settled with the help of Lok Adalats. This is an alternate dispute resolution mechanism recognized under the Legal Services Authorities Act, 1987.
Lok Adalats are a forum where disputes/cases pending in the court of law or at pre-litigation stage, like land and property disputes, are settled/ compromised amicably. The decision of the Lok Adalat is final and binding; there is no provision for appeal. However, if the party is unsatisfied with the award, they can initiate the litigation process.
If you are planning to sell a property, one of the most critical factors you must consider during the sale is the process of registering the transaction.
Registering the Sale
Registering the transaction or sale is beneficial for both parties since it means that the government recognizes the transfer of property from the seller to the buyer. In India, all individuals must register(( The Registration Act, 1908.)) the sale of an immovable property for which the transaction costs exceed Rs.100. Since the cost of land or a house is much higher, this effectively implies that sale of such a property must be registered. Furthermore, all transactions involving gift of an immovable property, as well as lease for a period exceeding 12 months also need to be registered.
Disclosure of Information
As a seller, it is important to ensure that the transaction is carried out with absolute honesty and in full agreement with the buyer. This is necessary to ensure that there is no conflict or dispute that arises over the transaction in the future. When the buyer shows an interest in the land or house you wish to sell, you, as the seller, must:
- Disclose to the buyer any material defect in the property of which you are aware but of which the buyer is not aware, and which the buyer cannot ordinarily discover.
- Make available all the relevant documents to the buyer for examination, including all documents of title relating to the property.
A lease deed/agreement is the most common form of agreement used in many cities like Delhi, Bangalore, etc. It is also commonly referred to as ‘Rent Agreement’.
Rights Under a Rent Agreement
As a tenant, if you have signed a lease deed with your landlord, you have certain rights that you would not have in case of a leave and license agreement, such as:
Interest in Property
You have a right over the property in terms of its occupation and use since you are paying rent.
Right to Possession
You get exclusive possession to occupy the house being rented to you. This means that if the landlord has rented you a house or space, he cannot use the space assigned to you. It is for your exclusive use for the duration of your lease.
Protection from Eviction
The landlord cannot unilaterally end or shorten the duration of your lease without providing proper legal justification. You have certain protections available against eviction.
Please refer to this checklist to ensure you have all the essential points covered in your agreement.
Under the law, any person that is competent to enter into a contract i.e., who is 18 years old or above and is of sound mind, can sell an immovable property.(( Section 7 of the Transfer of Property Act, 1882.)) There are specific rules for sale of property by NRIs and PIOs in India. However, for the sale of property to be legal, various aspects come into consideration, such as:
- Whether you have the right to sell, i.e., whether you are the owner
- Whether you have the authority to sell the property. For example, seeing if you have a power of attorney or have been authorized by the owner to sell.
There are certain steps you should follow before signing the written rent agreement.
Due Diligence Before Signing
If you decide to take the house or give your house on rent, then here are some important things you should do before signing the written agreement:
Read Your Agreement
Before signing your agreement ensure that you or your lawyer has read the terms of the agreement. Please ensure that you have not signed a document without knowing the contents of it since you cannot later claim that you are not bound by the agreement because you did not read the agreement.
Ensure the Presence of Witnesses
After reading the terms of your agreement, both you and the landlord/licensor/tenant/licensee have to sign the agreement. Please make sure that there are two (2) witnesses signing the agreement as well. This requirement is not optional as without the witnesses signing the agreement it will not be considered to be valid.
Due Diligence After Signing
Here are some important things you should ensure after signing the written agreement:
Notarizing and Registration of the Agreement
After signing the agreement, make sure that you notarize or register your agreement if you are giving your house on rent or taking a house on rent.
For rent agreements which are for 11 months registration is not compulsory. However, it is compulsory to notarize the agreement.
Police Verification
After signing your agreement ensure that you get the police verification process done if you are giving your house on rent. As a person taking a house on rent you have no obligation to get the police verification done. However, you must co-operate with your landlord when he asks for your details for this process as the landlord is required to complete this process under the law.
NRIs and PIOs can sell property in India in accordance with the Master Circular.(( RBI’s Master Circular on Acquisition and Transfer of Immovable Property in India by NRIs/PIOs/Foreign Nationals of Non-Indian Origin, 2013)) An NRI can sell property in India to a person resident in India or an NRI or a PIO. A PIO can sell property in India to a person resident in India, an NRI or a PIO – with the prior approval of RBI. NRIs and PIOs are permitted to sell agricultural land /plantation property/farm houses only to a person resident in India who is a citizen of India.
Registration of Rent/ Lease Agreement
If your lease agreement is for a year or more, it is compulsory to register it with the office of the sub-registrar of the city you are living in. It must be registered within 4 months from when the lease agreement was made. If the agreement is not registered, it will not be accepted as evidence by court, if or when a case if filed in relation to the rented property.
Registration of your agreement is also a measure to ensure that your landlord does not charge you anything extra apart from what was already agreed upon or coerce you into any illegal transactions.
This is the reason why most agreements are for a period of 11 months, so as to avoid this registration process. In such cases, you need not register the agreement, but only notarise it.
However, in some cities, like Mumbai, where a leave and license agreement is used, it is compulsory to register the agreement, irrespective of the duration of tenancy. In Maharashtra, all agreements of tenancy, be it lease or leave and license, must be compulsorily registered by law.
Notarising Your Agreement
It is necessary to notarise any kind of rental agreement, if it is not being registered. This is because the agreement between you and your landlord is a contract and all contracts are usually validated by a notary. Notarising the agreement gives validity to your document and also affirms that the parties signing the agreement are in fact who they are. This not only ensures you of your rights and duties, but in case the matter goes to court, a notarised agreement is likely to not be disputed.
One of the most critical aspects to consider when buying a land or house, is knowing whether:
The price of the property is fair
Since land and property fall under State subjects as per the Constitution of India, laws and transactional rules vary depending on the state where the property is located. Depending on where the property is located and the nature of construction (if applicable), different states have introduced a system of determining a minimum base price for the property, called ‘circle rate’, or ‘ready reckoner rate’. These circle rates are speculative and vary greatly even within the same city- from one area to another- and are frequently updated and notified. In addition to the location-based circle rates, the value of a property is also affected by the services it has access to, and the builder/ housing society. However, these circle rates only serve as guides, and the actual price may vary based on the market value of the property, called fair market value.
The ownership of the property is free of disputes
There are various ways in which you can find out if the ownership of the property you want to purchase is disputed. The simplest way is to check the title deeds of the property in question. You can also enquire with the local tehsildar’s office or that of the village officer where the property is located. Other documents such as e-record of rights, property tax receipts, and survey documents are also used to establish ownership.
Follow the steps given below to register your rent agreement. In most cases, your broker will help you through this process.
Step 1
Once the agreement is ready, pay the relevant stamp duty amount.
Step 2
Book an appointment with the sub-registrar of your sub-district. Most states have set up an online appointment system.
Step 3
The landlord/licensor, tenant/licensee and two witnesses must visit the sub-registrar’s office at a given time as per the appointment, along with the following documents:
- Agreement with duly paid stamp duty
- Two recent passport size photos of tenants, landlord and witnesses
- Identity proof of tenants, landlord and witnesses (Aadhar card, Election ID card, Passport, Government issued ID card, Identification verified by gazetted officers).
Step 4
Finally, to complete registration, pay the relevant registration fees while submitting the documents mentioned above.
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