A rental agreement can be verbal, written or implied. However, a written agreement summarises the terms and conditions mutually accepted by both parties and serves as evidence in case of a disagreement. Once both parties agree to the terms and conditions mentioned in the agreement, it cannot be altered without their mutual consent.
At a time when tenancy disputes are on the rise, it is important to secure a property by drafting a comprehensive rent/lease agreement and registering the agreement at the nearest sub-registrar’s office. A registered rental agreement legally safeguards the rights of both parties in case of future conflicts.
Why should you register a Rent agreement?
A registered rental agreement is imperative for a discord-free landlord-tenant association. It fosters the relationship between two parties while legally protecting their rights. Further, it informs others about the ownership of the property. A property owner should never settle for an oral agreement since it is not bound by law and therefore, should always insist on executing a written agreement.
When a deal involves a significant asset such as a residential property, the landlord needs a document that protects him/her legally in case of any dispute or opposition from the other party in the future.
When to register a Rent agreement?
According to The Registration Act, 1908, a ‘lease’ includes all entities such as residential property, commercial property, undertaking lease for cultivation, hereditary allowances, fisheries, ferries, rights to ways, lights and any other benefit arising out of the land (excluding timber or crops cultivation). All these properties should be registered if they are leased out to a tenant for a period exceeding 11 months. A rent agreement made for 11 months or less does not require registration.
While it is not mandatory to register rent agreements having a duration of less than a year, it is still an advantageous and proactive practice. You can also notarise it with a notary public and pay the stamp duty. A large number of disputes regarding the legitimacy of 11-month rent agreements have taken place in various High Courts and the Supreme Court of India, where in some instances, 11-month agreements have been deemed inadmissible in court. Therefore, future disputes that may arise at any time are not worth the savings on stamp duty and registration required to get a rent agreement registered.
Clauses to check before registering a rent agreement
To avoid any dispute that may arise during or at the end of the tenancy period, it is important to check the clauses mentioned in the rent agreement before registering it. Here are some important clauses you should not miss in a registered rent agreement:
Clauses to check for tenants in rent agreement
Token and security deposit
The agreement should clearly state the security deposit at the beginning of the tenancy and the procedure to refund the amount at the end of the tenancy period.
Bearer of the repair and maintenance cost
The agreement should also thoroughly explain who will bear the repair and maintenance expenses of the let-out property.
Pet Policy
The agreement should also include the pet policy of the rented property, and both the tenant and landlord should be on the same page for any future pet adoption.
Parking space
The agreement should be clear about the parking space availability for the tenant, along with the specifications and capacity.
Clauses to check for landlord in rent agreement
Subletting, lock-in period and mid-term termination terms
It is important to have details about the terms of subletting the property, tenancy lock-in period and mid-term termination conditions.
Occupancy capacity
The agreement should also be clear about the number of occupants at present and expected in the future. This includes family members, the addition of a spouse, etc.
Since a registered rent agreement is admissible in a court of law, it is important to take care of all the details that may lead to any dispute in the future. It is advised to consult a legal professional to help draft and check the clauses required before registering the rent agreement.
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How to register the Rent agreement?
Outline a rental agreement with important clauses regarding the security deposit, rent and maintenance. For registration, both the property owner and the tenant, along with two witnesses are required to be physically present at the sub-registrar’s office. If both parties are not present at the same time, he/she must sign the Power of Attorney, granting the attorney the rights of agreement closure. All of them are required to carry their valid ID cards for authentication. In addition, the registration of the rental agreement is not permitted through an agent.
Note: It is important to keep track of the time when the deed was created. The registration must be made at least four months before the date of deed expiration.
What are the documents required for Rent agreement registration?
- The original proof/evidence of ownership or title of the property
- Property documents such as Index II or tax receipt of the property to be leased
- Two photographs of each of the parties and one of each of the witnesses
- Copy of the address proof of both the parties and witnesses. Passport, Aadhaar Card, Ration Card, Bank Passbook or Driving License; any of them can be submitted as the address proof
- Route map of the property leased out
What are the registration charges?
Stamp duty and registration charges vary per state. For instance, in Delhi, stamp duty charges for a property rented out for a period of up to five years is two percent.
Stamp duty on rental agreements
| Area | Agreement time period | Amount |
|---|---|---|
| Delhi | Up to 5 years | 2 percent |
| Noida | Up to 11 months | 2 percent |
| Karnataka | Up to 11 months | 1 percent of the total rent plus deposit paid annually or Rs 500, whichever is lower |
| Tamil Nadu | Up to 11 months | 1 percent of rent + deposit amount |
| Uttar Pradesh | Less than a year | 4 percent of annual rent + deposit |
| Maharashtra | Up to 60 months | 0.25 percent of the total rent |
| Gurgaon | Up to 5 years | 1.5 percent of the average annual rent |
| Gurgaon | 5-10 years | 3 percent of the average annual rent |
Who pays for the Rent agreement registration charges?
There is no law that specifies who should pay for the rent agreement. However, through a common understanding, tenants and property owners should divide the cost of registration between each other. Often, tenants may have to bear the total cost of the rental agreement and the registration charges.
Is online Rent agreement registration possible?
Online registration of rental agreements is possible in a few states, including Maharashtra. For this, the individual/landlord needs to create a profile by referring to the e-filling website (https://efilingigr.maharashtra.gov.in/ereg/). After creating the profile, the user needs to enter various details of the property such as village, taluka, property type, area, address and other available details.
Upon successful completion, the landlord has the option to make payment of stamp duty charges and fees online by generating an online challan receipt. Post successful payment of the requisite fees, the landlord can book an appointment with the sub-registrar. He/she needs to arrive at the sub-registrar’s office on the appointed date with all the necessary documents to ascertain the successful registration of the property.
For other states, both the parties along with the witnesses have to visit the office of the sub-registrar to get the deed registered. Click here to know how to register a rent agreement in Delhi.
How do I make a Rental agreement online?
Various online platforms offer the service of making a rental agreement online. 99acres also provides such a service. While the steps may vary per platform, the fundamental process involves the following elements:
- Filling in the details about the landlord, tenant, property address, and terms and conditions such as lease duration, monthly rent, and security deposit amount, among others. You can choose between a lease agreement and a leave and license agreement, as per your preference
- Next, you have to preview the prepared agreement to confirm whether all the details provided are accurate. Post the same, you have to make a payment to the platform via any acceptable payment mode such as UPI, debit card, etc. The components of the payment will include the applicable stamp duty charge (you may have to calculate it), convenience charge and delivery charge (these charges vary per platform), as well as the applicable Goods and Services Tax (GST)
- The platform will have the online rent agreement printed on stamp paper of appropriate value and get it delivered to the address mentioned by you. If you want a soft copy, you can ask for the e-stamp and the online rent agreement sent to your email. The average time for delivery of the hard copy of the rent agreement is 3-5 working days
Can a rental agreement be signed online?
Yes, most platforms offering online rent agreements provide an option to sign the contract digitally. There is an option to share the agreement with both parties so that they can digitally sign it. Portals ask for the signature of both parties after the payment and generation of the agreement. After both parties have signed the agreement, they can download the online rental agreement.
Section 5 of the Information Technology Act, 2000, provides legal recognition for digital signatures.
Can the Rent agreement be registered online?
Yes, you can register a rent agreement online. It should either be printed on stamp paper or have an e-stamp affixed on the front page. Platforms that generate online rent agreements provide these services as applicable in a State or Union Territory (UT).
However, while the parties (tenant and landlord) can take the appointment for the registration online, they will have to be physically present at the office of the Sub-Registrar of Assurances to conclude the procedure.
Is an online Rent agreement valid?
Yes, an online rent agreement is legal and valid if it meets the following conditions:
- The agreement has been drafted with the mutual consent of the tenant and the landlord
- It has been digitally signed by both parties or printed and then signed
- It is printed on a stamp paper of appropriate value or has an e-stamp affixed at its beginning
While an online rent agreement is valid, it needs to be registered at the concerned office of the Sub-Registrar of Assurances to have legal backing. For instance, in case of a dispute, an unregistered rent agreement (even if it has a duration of lesser than 11 months) may not be accepted as evidence in court. Thus, it will make dispute resolution much more time-consuming and complex.
How to get a hard copy of the online Rent agreement?
Once both parties have digitally signed the online rent agreement, the platform providing the agreement generation service will send the hard copy of the rent agreement along with the printed e-stamp paper or the rent agreement printed on the stamp paper to the address provided by the service user. The delivery generally takes 3-5 working days.
Over the years, there has been a surge in the number of tenant-landlord disputes. No landlord/tenant wants to get entangled in a legal situation. Thus, to avoid any unwanted legal situation, it is essential to get the rent agreement registered before renting out the property. There is a high probability that if you get your rental agreement registered with the local registrar, you can easily avoid unwanted legal situations.
Are notarised and registered Rent agreements different?
Basically, a notarised agreement is a simple rent agreement printed on a stamp paper, attested by a Public Notary (majorly advocates and lawyers), whereas a registered rent agreement is printed on a stamp paper and registered with the sub-registrar of the area, just like a sales deed. Landlords and tenants should know that, unlike a notarised agreement, the registered rent agreement is admissible in Court in case of any legal proceedings.
Is an unregistered rental agreement valid?
Any unregistered rental agreement is valid only if the rental period is 11 months. If the rent agreement duration is for more than 11 months, it is important that you get it registered to make it legally valid. As a landlord, you may find it difficult to recover unpaid rent from the tenant if your rental agreement is unregistered.
Hence, when renting out a property, having a registered rental agreement is essential. It would go a long in protecting the interest of both parties and avoiding financial incongruities.
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