By Pankaj Anup Toppo
Once you have zeroed in on the person, you wish to rent out your property to, you are expected to hand over possession of the property to him/her only after the mutually agreed terms and conditions under which the property is given on rent is put before each other. This document is called the ‘rent agreement’ or the ‘lease agreement’. Typically, the rent agreement is prepared by the real estate agent hired by you and your tenant. To validate the agreement, both you and your tenant ought to sign the agreement in the presence of two people who are non-beneficiaries of your property and will sign on the agreement as witnesses. In most cases the real estate agent doubles as one of the witnesses.
To give more teeth to the rent agreement, rather than just getting it notarised you should insist on getting the same registered by paying the necessary stamp duty. However, for that you will need to pay the necessary stamp duty and most real estate agents, who are well versed in the business are adept at making a registered agreement which is way simpler than a sale agreement running into two or three pages. However, here are a few things to consider.
Duration of lease. Make sure that the duration of the lease is clearly mentioned in the agreement. It must have the start date and the end date of the rental term period. Typically, most rent agreements of the residential property market are for a period of 11 months. Also a clear mention of the terms and conditions under which the agreement can be renewed after it expires should be incorporated in it at the outset.
Further, you must include a clause clearly stating the process in which this agreement can be terminated before the mandatory 11 months. The clause should clearly state both your (lessor) rights as well as the rights of your tenant/lessee to avoid any confusion.
Date of rent payment. A clear mention of the date, on or before which the rent has to be paid must be mentioned in the agreement. However, a practice prevalent today is accepting post-dated cheques for the entire duration of the lease, but there must be a mention of the cheque numbers handed over to you in the agreement and the repercussions if the cheque/cheques bounced.
Regular maintenance. A clause clearly stating who will be responsible for regular repairs of the property must also be incorporated in your agreement. Typically, minor repairs of the property are taken care of by the tenant. But it is your responsibility to ensure that the property is handed over for possession in good shape. This would mean that all electrical and water connections are in working condition, the electricity meter and water motor are in running condition.
Previous bills. While utility bills like those for water, electricity and so on will be taken care of by the tenant, on your part you will need to ensure that all bills generated before the new tenant has moved in have been cleared. Most often, duration of the bill generation may not match with the occupancy period of your new tenant; so there must be a clear understanding of how that short duration bill will be cleared.
Draft an agreement according to your needs. Remember, this is the single most important document that will protect not only your rights as a lessor but your property.
IN BRIEF
When accepting post-dated cheques for the entire duration of the lease, mention the cheque numbers
handed over in the agreement and the repercussions if these are dishonoured.
Once you have zeroed in on the person, you wish to rent out your property to, you are expected to hand over possession of the property to him/her only after the mutually agreed terms and conditions under which the property is given on rent is put before each other. This document is called the ‘rent agreement’ or the ‘lease agreement’. Typically, the rent agreement is prepared by the real estate agent hired by you and your tenant. To validate the agreement, both you and your tenant ought to sign the agreement in the presence of two people who are non-beneficiaries of your property and will sign on the agreement as witnesses. In most cases the real estate agent doubles as one of the witnesses.
To give more teeth to the rent agreement, rather than just getting it notarised you should insist on getting the same registered by paying the necessary stamp duty. However, for that you will need to pay the necessary stamp duty and most real estate agents, who are well versed in the business are adept at making a registered agreement which is way simpler than a sale agreement running into two or three pages. However, here are a few things to consider.
Duration of lease. Make sure that the duration of the lease is clearly mentioned in the agreement. It must have the start date and the end date of the rental term period. Typically, most rent agreements of the residential property market are for a period of 11 months. Also a clear mention of the terms and conditions under which the agreement can be renewed after it expires should be incorporated in it at the outset.
Further, you must include a clause clearly stating the process in which this agreement can be terminated before the mandatory 11 months. The clause should clearly state both your (lessor) rights as well as the rights of your tenant/lessee to avoid any confusion.
Date of rent payment. A clear mention of the date, on or before which the rent has to be paid must be mentioned in the agreement. However, a practice prevalent today is accepting post-dated cheques for the entire duration of the lease, but there must be a mention of the cheque numbers handed over to you in the agreement and the repercussions if the cheque/cheques bounced.
Regular maintenance. A clause clearly stating who will be responsible for regular repairs of the property must also be incorporated in your agreement. Typically, minor repairs of the property are taken care of by the tenant. But it is your responsibility to ensure that the property is handed over for possession in good shape. This would mean that all electrical and water connections are in working condition, the electricity meter and water motor are in running condition.
Previous bills. While utility bills like those for water, electricity and so on will be taken care of by the tenant, on your part you will need to ensure that all bills generated before the new tenant has moved in have been cleared. Most often, duration of the bill generation may not match with the occupancy period of your new tenant; so there must be a clear understanding of how that short duration bill will be cleared.
Draft an agreement according to your needs. Remember, this is the single most important document that will protect not only your rights as a lessor but your property.
IN BRIEF
When accepting post-dated cheques for the entire duration of the lease, mention the cheque numbers
handed over in the agreement and the repercussions if these are dishonoured.
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