This article is written by Niharika Agrawal, from IFIM Law School. This article deals with all the fundamentals of a legitimate rental contract and its format.

This article has been published by Abanti Bose.

Table of Contents

What is a rental arrangement?
Importance of a rental agreement
Duration of rental arrangements
Procedure for signing up a rental contract
Documents needed for a rental arrangement
Registration charges
Important stipulations of a rental agreementName of the residents
Duration of the occupancy
The rental amount
Cost of period or upkeep
Cost of security deposit
Terms
Renewal and notice duration
Amenities attached with the residential or commercial property
Exit stipulation
Signature and date
Police confirmation


What is a rental agreement?

A rental contract is a crucial legal document that requires to be signed by both the celebrations i.e., the landlord and the occupant, in order to control the tenancy. It consists of all the comprehensive info about the celebrations and the conditions connected to the tenancy of the residential or commercial property on lease. It is binding upon both parties. It includes all standard aspects such as rent, security deposit, information regarding the residential or commercial property, its size, address, type, and most importantly duration of the agreement. Since it is binding in nature, both parties are advised to go through it thoroughly before signing and accepting the stipulation. The contract remains void until 2 witnesses or non-beneficiaries are present and sign the contract as witnesses.

The rental agreement is generally prepared by either of the parties with the authorization of the other party and both the celebrations need to accept the exact same. A rental contract might be either oral, composed, or suggested. However, it is normally preferred to have a written arrangement as that might be handy as a piece of evidence for shared authorization of the parties. The terms and conditions of the arrangement can not be modified unless and up until parties equally agree to it.

Importance of a rental agreement

The rental contract being a legal document plays a very essential role. A Rental contract safeguards the rights of both parties and saves them from future conflicts. During the agreement in between proprietor and renter, there might occur some disagreements between them. Such disputes might be fixed through the contract. It offers security to the property owner for his residential or commercial property and likewise secures renters from unlawful demands of the landlords.

The rental arrangement also provides ownership of the residential or commercial property to the tenant for a specified amount of time. Oral contracts are not implemented by law for that reason it is always encouraged to execute a written arrangement. Another crucial element is it acts as a piece of legal evidence.

Duration of rental agreements

Rental contracts can be fixed for any duration based on the needs of the parties and can be restored according to the regards to the agreement. However, in the case of a rental contract, it's normally for 11 months. This is to prevent the stringent rental law which applies for the lease contract 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 requires to be signed up. 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 need to pay stamp duty, registration charges, and other expenses. Therefore, to be exempt from such costs, the parties in the rental agreements mutually perform the agreement 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 signing up a rental contract

Registration of rental agreements is elective. However, it works in case of disagreements as notarized contracts are not relevant in the court of law. Therefore, it is constantly better to be registered.

One can register the lease arrangement by going to the close-by sub-registrar's office. It is very important to keep in mind that the process of registration should be finished at least four months before the date of expiration of the deed. Therefore, one needs to monitor the date and time when the deed was created. Once the deed ends, then a fresh deed needs to be developed. After this, a fresh deed needs to be developed. Both the celebrations require to be present together with 2 witnesses for attestation. If just among the parties is present and not both of them, then today celebration must sign the Power of Attorney, granting the rights of agreement closure.

Documents required for a rental contract

1. Original proof of ownership of the residential or commercial property.
2. Residential or commercial property papers such as tax invoices.
3. Two passport photographs of each of the parties and one copy of each of the witnesses.
4. Documents associated with resolve proof 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 set registration charges in the entire country. It differs from state to state. It also includes stamp duty charges.

Important stipulations of a rental agreement

Name of the residents

Name of the residents includes all the people residing on the residential or commercial property. Such names specifically should can taking responsibility for the residential or commercial property. These names could be beneficial in case any conflict emerges. For example, if any tenant unexpectedly abandons your home 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 tenancy

The parties need to point out the set period in the arrangement. After the expiration of the period, it can be renewed with the prescribed procedure by shared permission of the celebrations. Mentioning the duration of the occupancy in the rental contract can keep the owner on the safer side. It likewise secures the renter as the owner can not require them to leave the residential or commercial property before the due date.

The rental quantity

The amount of the amount repaired for the lease must be specified in the rental agreement. It must likewise include the modifying terms. This stipulation also consists of 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, etc also needs to be pointed out in the arrangement. This stipulation safeguards the parties from the unlawful holding of the cash or of the cash.

Cost of period or maintenance

In some cases, the cost of the upkeep is paid either by the owner or the renter. Such amount of payment and the person paying the quantity should be mentioned particularly in the agreement. Not only the cost of upkeep however likewise any other costs that might be major or minor such as repair work or electric expenses, and so on must be covered within the rental contract. This provides clearness about such factors to both celebrations during the occupancy duration.

Cost of down payment

The amount that requires to be paid by the renter to the proprietor must be mentioned in the rental agreement and should be signed by both celebrations. This saves both the celebrations from illegal demand and claims. The property manager can also be alleviated in the event where the occupant vacates the residential or commercial property without making the payment of rent.

Terms and conditions

The arrangement must include how the residential or commercial property and its surroundings must be dealt with. Factors such as subletting, modification in the facilities, enabling of the pets, etc need to be cleared in the contract.

Renewal and notice duration

The renewal and notice durations ought to be correctly discussed in the agreement for the sake of previous knowledge. It consists of the date of renewal of the agreement and the notice duration and how it needs to be performed.

Amenities connected with the residential or commercial property

It consists of all the other features that are attached to the residential or commercial property. This needs to be pointed out in the agreement for the security of the proprietor and his residential or commercial property. It likewise includes the most recent condition of the residential or commercial property for future reference. This assists the proprietor to prevent any damages or the financial settlement of any repair work throughout the tenancy period.

Exit stipulation

This stipulation includes clearance of any other charges before the termination of the contract or before the leaving of the residential or commercial property must be solved.

Signature and date

This is the most crucial provision of the rental contract. In this, both the renter and the property owner agree to all the terms and conditions of the contract and accept the contract by signing this file. It also ensures that failure in compliance with the agreement led to deal with legal charges by either of the celebrations. Before signing the contract it is extremely essential to check out every clause of the arrangement carefully.

Police verification

The significant aspect of any rental contract is the police confirmation of the tenant. This includes a background check of the tenant to avoid any type of illegal activity from using the residential or commercial property. It not only guarantees the security and security of the residential or commercial property however also the area. Non-compliance with this provision of the arrangement is punishable under Section 188 of the Indian Penal Code.

Common errors in a rental agreement

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 eviction of the tenant.
2. Does not specify the lock-in duration and termination. Lock-in period i.e. the minimum duration till which the renter can not vacate the residential or commercial property. The renter should likewise define priorly the notification period which requires to be sent before ending the agreement.
3. Ignores to define the sum of cash that requires to be paid as rent, fixing charges, and the mode of payment.
4. Ignore the clause connecting to subletting of the residential or commercial property.
5. Does not mention the details related to the Power of Attorney.
Format

This is the basic format of the rental agreement.

RENTAL AGREEMENT

This rent contract is made on ... ...( date) between ... ......( name of the property owner) S/o ... ... ...( father's name of the property owner), Address ... ... ...... (residential address of the proprietor). Hereinafter described as the landlord or the very first party.

AND

... ... ... ... (Name of renter), hereinafter referred to as the occupant, or the 2nd party, address ... ... ... ... ...( domestic address of the tenant)

The term Landlord and the tenant will mean and also include their legal heirs, followers, appoints, representatives, and so on.

Whereas the very first celebration 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 accepted blurt the stated residential or commercial property to the 2nd party for a monthly lease of Rs. ....../- (in words) per month.

Now this rent agreement is witnessed under:

1. The occupancy is according to the English calendar and the arrangement is beginning from ......( date of start of contract).
2. The lease agreement is approved for the duration of 11 (eleven-month) starting from ... ...( date of beginning), and the agreement can be extended further with the shared authorization of the celebrations.
3. The function of the tenancy is simply for residential functions and will not be utilized for any other purpose.
4. The 2nd party will need to pay Rs. ... .../- (in words) as regular monthly rent, which need to be paid between 1st to 5th day of monthly, and if the renter continues to remain after 11 months from the starting date, the lease will be increased.
5. The 2nd shall pay the electrical power and water charges separately according to their consumption to the very first celebration.
6. The 2nd party should not sublease the residential or commercial property to the sub-tenant under any scenarios without the authorization of the property manager.
7. The 2nd celebration shall stick to all the guidelines and regulations, by-laws set by the regional authorities in regard of the leased residential or commercial property and will not get involved or do prohibited activities in the leased residential or commercial property.
8. The 2nd celebration shall refrain from doing any construction or make any alteration in the rented premises either major or minor without the approval of the landlord.
9. The second party will need to permit the proprietor or his authorized agent to participate in rented facilities for its evaluation or general monitoring for any repair work if required.
10. The 2nd party will bear the expense of everyday minor repair work.
11. This arrangement might be withdrawed or terminated before the expiration of this tenancy period 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 property manager and the tenant have hereunto subscribed their hand at ______ (place) on this the _____________ (date of rent contract) year first above discussed in the existence of the following witnesses.

Witnesses:

1.

2.

___________ (name of the landlord) _________________ (name of the tenant)

Model Tenancy Act, 2021

To offer an uniform guideline in India in regards to rental housing, the Model Tenancy Act, 2021, was enacted by the main federal government. The main goal of this Act is to govern the rental housing market, like domestic and industrial facilities, by developing standards for occupancy, rights, and tasks of the property managers and renters and resolutions for the disputes emerging out of the tenancy. This Act applies to the entire of India consisting of all the states and union areas. According to this Act, the contract must remain in written kind and both the celebrations must sign the agreement. The rental arrangement should include all the appropriate conditions which would be binding on both parties.

The existing lease contract will remain outside the province of the design tenancy law, as it is still progressive and will not have a retrospective effect. This Act considers all the rental arrangements that include leasing property and industrial residential or commercial properties. However, the agreement prepared need to be for more than 11 months. An agreement of up to 11 months is not covered under this Act. This eventually indicates that the proprietor and the renter can not seek resolution under the rules of the Act in case of any disputes.