Theme: Rent

Signing the Written Agreement

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.

Registration or Notarization of Agreement

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.

How to register a rent agreement

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.

Paying Rent

While paying rent, there are certain things you should keep in mind:

Depositing Rent

  • In case of lease deeds, the law requires you to pay the rent by the 15th of the month. However, this is not necessary for a leave and license agreement.
  • You usually pay rent for the coming month. For example, if you are paying rent on 15th June, you are paying for the period of 15th June to 15th July.
  • The date of the rent payment will be specified in your written agreement for both rent/lease and leave and license agreements.
  • Rent can be paid to the landlord/licensor through cheque or online transfer so that there is a record of payments.
  • Always ask for a rent receipt from the landlord/licensor, especially if you have paid your rent in cash. The proof of transaction you get from the bank in cases of online or cheque transfers is not the same as rent receipts. Receipts from banks or online account statements are not the same as the receipt you get from your landlord/licensor acknowledging that you sent the rent. This is so that you have a proof of payment in the form of a receipt which you can use for tax purposes, evidence in Court etc.

Increasing Rent

  • Your written agreement will mention the percentage of increase of rent after the expiry of the term of the written agreement. Try to find out the practice in your city so that the raise percentage is not unreasonable.
  • If your landlord does decide to increase the rent, he can only do it after the term of your written agreement is over

Stamp Duty

Either the landlord or you or both of you will have to pay the “stamp duty” which is a tax levied on the agreement that you enter into when you are renting a house or a flat. You have to give your stamp duty during the process of registration.

Security Deposit

Security deposit is taken by the landlord/licensor since during the rent period as a tenant/licensee you are going to be in possession of his property. It is only returned when you are handing over the keys to the landlord/licensor while vacating the flat. The landlord/licensor would usually inspect the house for any damage.

Negotiation of Security Deposit

There is no specific law or regulation that determines the amount of the  deposit a landlord/licensor can take. The amount is usually negotiated when the agreement is being made. The security deposit is taken by the landlord/licensor for the following purposes :

  • To recover any costs incurred due to any damage caused by you during the rent period
  • To recover unpaid rent or utility bills.
  • To use it as leverage to evict tenants/licensees.

Amount of Security Deposit

In some cities, like Delhi and Mumbai, it is a practice to take 1 to 2 months of rent amount as a security deposit, and in some others, like Bangalore, the amount taken as security is almost 10 months of rent.

Some landlords/licensors even increase the security amount when the rent increases at the end of an 11 months agreement.

Since there is no law regulating security deposit, it is all based on your capacity to negotiate and a sense of good faith between you and your landlord/licensor.

Police Verification Process

While renting out their property, landlords/licensors are required by law to get police verification of their tenants/licensees done. This is not optional.

This process is done mainly for security reasons, so as to verify your background and check the details of past residence/family/criminal record (if any) etc.

If they do not comply with this process while making the rent/lease agreement, the owner can be punished jail time and/or fine. However, no action will be taken against the tenant.

There are two ways, you can get the police verification done. You can either approach the nearest police station and acquire a tenant verification form from them or hire a professional to do it for you for a fee. Some brokers also provide this service.

Step 1

For police verification the following documents will be taken from the prospective tenants/licensees:

  • Duly filled police verification form
  • Identification Proof – Aadhar Card, Ration Card, Driving License or Passport
  • Two Passport size photograph

The police verification form can be obtained either directly from the police station, the broker or even online.

Step 2

As soon as the owner receives these documents, they must sign the form and submit it along with the documents provided by the tenant and a copy of the lease/leave license to the police.

Step 3

The police will then verify your background based on the form submitted by the landlord/licensor. At this stage, an acknowledgment receipt will be issued to the landlord/licensor. This process can be done online for some states.

Step 4

After the process is completed, the police will then hand over a signed and attested copy of the form notifying the landlord of the result of the background check or criminal records, if any.

Eviction from rented property

Read below to know the conditions for eviction from the rented property.

Lease Agreement/Rent Agreement

If you have a lease agreement, only you or anyone you give permission to has the right to live in the rented property. However, there are certain circumstances where the landlord can evict you from the house. To do so, the landlord must make an application to an authority under this law called the Rent Controller, to evict you.

Some of the reasons for which a landlord can apply to evict you if you have a rent/lease agreement are mentioned below:

  • You have not paid rent for two months after receiving a demand notice from the landlord.
  • You have sublet the house, either in part or full, to someone else without the consent of the landlord.
  • You have used the house for a purpose other than that for which you rented it, and in this process caused public nuisance, damage to the premises, or harmed the interest of the landlord.
  • Neither you nor your family members have been living in the house for 6 months or more. (If you have rented a house for residential purpose and are using it for commercial purposes, then it will be counted as not living in the house)
  • You have caused substantial damage to the house.
  • The landlord wants to repair, rebuild or reconstruct his property, but cannot do it with tenants living there.
  • The house has become unsafe for human habitation and the landlord must carry out the repairs.

It is important to note that the reasons for eviction may differ from state to state. But largely the principles of eviction stay the same. The landlord must have a reasonable ground within the bounds of the law to evict you. If you feel that you have been unjustly evicted by your landlord, please contact a lawyer for further help.

Leave and License Agreement

A leave and license agreement will have a provision for the licensor (person giving out the property) to give a one month notice to get the licensee (person staying in the property) to leave their property. There are no other protections available under the law for this type of agreement unless explicitly mentioned in the contract.