Things to check before signing a rental/lease agreement
What is a rent agreement?
A rental/lease agreement consists of a set of rental rules which both the tenant and the owner agree to follow. It is a legal document. It contains the terms and conditions that govern the tenancy.
What are types of tenancy agreements?
There are two types of tenancy agreements in India –
- Leave and license agreement
- Lease agreement A leave and license agreement is for a period of 11 months, after which it can be renewed. A lease agreement is for a period of at least 12 months and can be renewed after the end of the term.
What things should one check before signing a rental/lease agreement?
Things to keep in mind while signing a rental/lease agreement are:
- Rent tenure : The term for which the rental agreement stands valid after which it needs to be renewed.
- Rent amount: Check the amount of payment to be made each month
- Security amount: Make sure the security deposit amount is also explicitly stated in the agreement. It may contain any other relevant information, such as how the deposit may be used.
- Rent payment date : The agreement should also specify when payments are due each month, and the type of payment method your tenant intends to use.To further reduce the risk of financial loss, the agreement should outline additional fees that the tenant may owe if rent cannot be collected by the due date.
- Rent escalation clause: A tenant should check if the landlord has added a rent escalation clause which mentions the percentage of increase in rent and date from which the rent charges would increase.
- Notice period and penalty: Most agreements require a minimum notice period of 30 days. There is an early exit fee which is usually one month rent charged as penalty.
What is the model tenancy act ?
The model tenancy act was introduced in 2019 by the union cabinet. According to it, the tenant must sign a rent agreement when entering into an agreement with the landlord. The agreement consists of terms and conditions for both parties.
Does the model tenancy act cover all rent agreements?
Yes, the model tenancy law will cover all rent agreements related to residential and commercial properties. However, there is one condition. In order to be applicable under the rules of the Model Tenancy Act, the rent agreement has to be drafted for a period exceeding 11 months. In case the agreement is signed between the tenants and the landlord for a period upto11 months the rules of the model tenancy act will not be applicable. Hence, disputes arising out of such agreements cannot be settled under the Model tenancy act.
What can be done if the landlord refuses to return the security deposit?
In case the landlord refuses to return the security deposit, a legal notice can be issued against him. In certain extreme cases even a police complaint can be made.
What can be done if the tenant absconds from the property?
Incase the tenant absconds the property the landowner can-
- Issue a legal notice against the tenant asking for the reason for abandonment of the property.
- Incase there is no response from the tenant, a suit of eviction against the tenant can be filed on the grounds of non-payment of rent and also for leaving the property without any prior notice.