- What is a Rent Agreement?
- Residential Rent Agreement
- 1. Tenure
- 2. Security Deposit
- 3. Consideration
- 4. Lock-in- Period
- 5. Maintenance
- 6. Representations and Warranties by the LANDLORD
- 7. Representations and Warranties by the TENANT
- 8. Inspection
- 9. Alteration
- 10. Cancellation
- 11. Posession
- 12. Force-Majeure
- 13. Dispute Resolution
- 14. Registration
- Frequently asked Questions
- Is the landlord/lessor liable to pay GST when the residential property is rented for commercial purpose?
- How to evict a tenant in India?
Everyday thousands of people migrate to metro cities like Mumbai, delhi, pune, banglore etc, in search of work. To find appropriate employment in these big cities is not so difficult. But, unfortunately to find a suitable and reasonable place to stay is a complicated task. Prices of residential properties in these cities is sky-rocketing. Buying a house is a challenge for every middle-class person. As a result, people opt to take residential properties on rent as a solution. It is very necessary that such an arrangement is stipulated by a rent agreement for a smooth functioning of the same.
What is a Rent Agreement?
A rent agreement is a legal contract between the landlord (owner of the property )and the tenant (to whom the property is rented), that has pre-fixed terms and conditions mutually agreed by both the parties, with respect to the rental property. The object of creating such an agreement is to avoid any future disputes between the parties. Rent agreement is governed by the Rent Control Act of the state where the rental property is situated. For example, a rent agreement in relation to a property in Mumbai shall be governed by the Maharashtra Rent Control Act, 1999.
Important features of a Rent Agreement
- It creates a transfer of interest from the landlord to the tenant in the rented property.
- Tenancy rights are created.
- The Rent Agreement need not be registered if it for a period upto 11 months.
- Rent agreement is more in the favour of the Tenant.
- The terms and conditions in a rent agreement is always in accordance with the guidelines provided in the Rent Control Act, of the state where the property in question is located.
- Small causes court courts have the jurisdiction to try cases about the rent agreement.
To avoid any future dispute arising out of such tenancy, rent agreements should be drafted very cautiously. Below is the Sample Residential Rent Agreement
Residential Rent Agreement
This Residential Rent Agreement (hereinafter referred to as ‘Agreement’) is made at [City] this [Day, Month] of [Year], herein referred to as the (‘Effective date’).
BY AND BETWEEN
__________, Son of _________, aged _________ years, permanently residing at _________________________________________________________________________________________________, (hereinafter referred to as “THE LANDLORD”, which expression shall, unless repugnant to the context and meaning include his heirs, successors, administrators and assigns) of the ONE PART;
__________, Son of _________, aged _________ years, permanently residing at ____________________________________________________________________________________________________, (hereinafter referred to as “THE TENANT”, which expression shall, unless repugnant to the context and meaning include his heirs, successors, administrators and assigns) of the OTHER PART;
WHEREAS the LANDLORD is seized and possessed or otherwise well and sufficiently entitled to the premises situated at _______________________________________________________________________________________________________ with a total area of __________________ square feet and comprised of _____ rooms. (hereinafter referred to as “DEMISED PREMISES” )
WHEREAS, the TENANT having a requirement of a temporary premise for residential puropose, has approached the LANDLORD with a request to allow the TENANT herein for temporary possession of the Demised Premises on a Rental basis.
WHEREAS on the request of the TENANT, the LANDLORD has agreed to grant a Rental in respect of the Demised Premises for a term of _______________ Months/Years in the manner from now on appearing.
NOW THEREFORE IT IS HEREBY AGREED TO, DECLARED AND RECORDED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:-
- The term of this Rent Agreement shall be for _____months/year taking effect from _____ (effective date) to _____ (expiration date).
- During this period, the TENANT shall have the exclusive right to occupy and utilise the Demised Premises as per the terms and conditions of this Agreement.
- The Agreement may be renewed after the expiry date, subject to the fresh and mutually agreed terms and conditions between the LANDLORD and the TENANT.
2. Security Deposit
- In consideration of taking the occupancy of the Demised Premises on the Rental, the TENANT shall make a payment of Rs ___________/- (Rupees ______________ Only), to the LANDLORD as an interest-free security deposit on the Execution Date of this Agreement.
- Such security deposit shall be refunded to the TENANT at the time of expiration, pre-termination or cancellation of the Agreement, but shall be subject to deductions arising due to the arrears of the Rental fee, CAM charges, or any other dues/penalties payable by the TENANT during the Agreement following the terms and conditions of this Agreement.
- If the LANDLORD fails to pay the security deposit by the date of the expiration, pre-termination or cancellation of the Agreement then the TENANT shall be entitled to the possession of the Demised Premises, but liable to pay the agreed monthly rent without any escalation until he receives such due security deposit from the LANDLORD.
- The TENANT shall pay to the LANDLORD a sum of Rs _________/- (Rupees___________ only), as the monthly rent of the ‘Demised Premises’ before the 5th day of every English Calendar month.
- The method of Payment preferred by both the parties is ___________
- Delay in the payment of the monthly rent consecutively for __________ months shall entitle the LANDLORD to terminate the Agreement.
- The Renewal of the Agreement shall have an escalation up to _____% per annum in the monthly rent amount with mutual consent by both parties.
4. Lock-in- Period
- Both the parties to the Agreement have mutually agreed upon a lock-in period of ______ months (in words) (hereinafter referred to as lock-in period) taking effect from the Effective Date of this Agreement. During this period, the parties are restrained from terminating the Contract and obligated towards the smooth functioning of the Agreement.
- The TENANT acknowledges that he shall make a continuous and non-interrupted payment of the monthly rent minimum for a period of _____________ months during the Lock-in Period.
- Both parties acknowledge and agree that the Lock-in Period is binding upon them for the duration specified.
- In the event of the termination of the Agreement during the Lock-In Period by the LANDLORD due to the breach of the terms and conditions of this Agreement committed by the TENANT then the TENANT shall be liable to pay the remaining monthly rent payable during the Lock-in Period to the LANDLORD.
- In the event of the termination of the Agreement during the Lock-In Period by the TENANT due to the breach of the terms and conditions of this Agreement committed by the LANDLORD then the LANDLORD shall be liable to pay the remaining monthly rent payable during the Lock-in Period to the TENANT.
- Notwithstanding the above provisions, either party may terminate this Rent Agreement during the Lock-In Period upon mutual written agreement.
- Both the parties shall be entitled to immediate termination of the Agreement during the Lock-In Period and be exempted from all liabilities or penalties in the events of force majeure or any circumstances beyond reasonable control making the performance of this Agreement practically impossible.
- All the municipal taxes and statutory duties levied on the demised Premises shall be borne by the LANDLORD himself.
- The electricity, telephone, internet, water charges, and all Common Area Maintenance charges (CAM) in respect of the demised property shall be borne by the TENANT on a timely basis.
- The TENANT shall pay for the wear and tear damages amounting up to Rs ______/- (Rupees _____________ Only).
- Any major damage caused to the DEMISED PROPERTY due to the activity of the TENANT shall be repaired by the TENANT at his cost.
- The TENANT shall not be liable to pay for the damages caused to the Demised Premises due to natural calamities.
- Any need for structural repairs arising in the Demised Premises naturally shall be borne by the LANDLORD.
- Representations and Warranties by the LANDLORD
6. Representations and Warranties by the LANDLORD
The LANDLORD represents that;
- He is the lawful and absolute owner of the Demised Premises and enjoys all rights, title and interest therein;
- The LANDLORD retains the sole and exclusive right to rent out his property and reserves the right to refuse or reject any offer of renting the same.
- The said premises is free of all security interest, lien and encumbrances;
- The LANDLORD is free of all criminal charges and judgements against him including insolvency;
- The Demised Premises was constructed in accordance with applicable laws. No notices have been issued by any municipal authority or local body challenging the legality of the Demised Premises;
- The LANDLORD has conducted all due diligence concerning the TENANT including a police verification before renting the said premises to him.
- The TENANT shall be entitled to erect temporary fitting, fixutures wooden partitions or any such minor additions or alterations in the Demised Premises provided the same shall be removed at the time of the expiration, pre-termination or cancellation of the Agreement.
- The LANDLORD warrants that he shall refrain from undertaking any activity in the Demised Premises that may cause disturbance in the peaceful possession of the TENANT;
- The TENANT acknowledges that, apart from the above-mentioned representations, the LANDLORD has made no express or implied representations or warranties concerning the Demised Premises.
- The LANDLORD shall indemnify the TENANT for any damages caused to him by the breach of the above-mentioned Representations and warranties by the LANDLORD.
7. Representations and Warranties by the TENANT
The TENANT represents and warrants that;
- He is legally capable of entering this Agreement and is free from any criminal charges against him.
- He is financially capable of entering into this Agreement and can bear the financial cost of the Rental.
- The Demised Property shall be used only for the aforesaid purpose by the TENANT.
- The TENANT shall use the premises with reasonable care and ensure the physical well-being of the premises;
- The TENANT shall not conduct any illegal activity prohibited by the Central or the State Government on the Demised Premises;
- The TENANT shall not transfer, assign, sub-let or sub-license the Demised Premises without the written consent of the LANDLORD;
- The TENANT shall refrain from causing any kind of nuisance to the neighbours;
- The LANDLORD, after giving a prior notice of ____ hours/days and between ___am to ____pm, shall have the right to enter and inspect the Demised Premises either by himself or by any other person appointed by him with the object of examining the physical condition of the said property or check upon to on the activities carried by the TENANT.
- The LANDLORD shall also be entitled to enter upon the Demised Premises on account of any complaints of private or public nuisance made by the neighbours against the TENANT, or for collection of rents or repair purposes.
- The LANDLORD or his authorized representative shall not cause any unreasonable disturbance to the TENANT’s right of quiet enjoyment of the Demised Premises during the inspection.
- It shall be the duty of the TENANT to allow easy access to the Demised Premises to the LANDLORD or his representative during the inspection.
- The TENANT shall not be permitted to make any material additions or alterations in the Demised Premises or any part or parts thereof, during the Rental term without intimating the LANDLORD about the need for such additions or alterations in writing.
- The TENANT is obligated to submit a request along with supporting documents about the same to the LANDLORD regarding any needful alterations.
- The TENANT may conduct the alterations only after obtaining permits and approvals.
- Any unauthorised alteration or addition in the Demised Premises, or any part or parts thereof, other than movable furniture and trade fixtures, shall, unless otherwise provided in the agreement between the LANDLORD and the TENANT, be and become the property of the LANDLORD and remain in the property at the expiration or earlier termination or cancellation of this Agreement.
The LANDLORD by serving a notice prior ____days (in words), shall have the right to cancel the Agreement before its expiry and demand the TENANT to vacate the Demised Premises on the following grounds;
- If the TENANT is found guilty of conducting any illegal activity on the premises;
- If the TENANT is guilty of causing any nuisance to the neighbours;
- If the TENANT has made any material addition or alteration in the premises without the consent of the LANDLORD.
- If the TENANT fails to make the timely payment of the monthly rent amount or fails to pay the same consecutively for ____ months whether or not such rent amount was demanded.
- If the TENANT breaches any of the terms of the Agreement;
- If the LANDLORD urgently needs to retain the DEMISED PREMISES due to unforeseen reasons, in that case, the TENANT shall be duty-bound to vacate the said premises and hand over the peaceful possession of the same. upon a written notice served prior ______________ days by the LANDLORD.
- The LANDLORD is entitled to regain the possession of the Demised Premises in a sound condition on the Agreement’s expiration, cancellation or pre-termination.
- The TENANT shall vacate the DEMISED PREMISES in a sound condition and hand over the peaceful possession of the same immediately after the expiry of the Agreement whatsoever without any objection and without any necessity to be served by the written notice about the same.
- In case of pre-termination or cancellation of the Agreement, a written notice before __________ days shall be served by the party initiating such pre-termination or cancellation to the other party.
- The events of Force-Majeure shall include but are not limited to any act of God, fire, flood, riots, physical or mental illness, epidemic quarantine restrictions, insolvency or any other unforeseen circumstances beyond reasonable control making the performance of the contract practically impossible.
- Any event of force majeure shall not constitute a breach of contract on the part of either Party.
- Parties are obligated to resume the performance of the Agreement as soon as reasonably possible, but non-performance of the Agreement due to the Force-Majeure events for a continued period of ____days shall entitle either party to terminate the Agreement.
- Termination of the Agreement due to the Force-Majeure events shall exempt the parties from all the liabilities and penalties payable following the terms of this Agreement.
13. Dispute Resolution
- Any dispute, claim, or controversy arising out of the Agreement shall be settled by the way of Arbitration.
- The arbitration award shall be final and binding upon the Parties, and judgment upon the award may be entered in any court having jurisdiction.
- Notwithstanding anything mentioned above, either partner may seek interim injunctive relief or other equitable remedies from a court of competent jurisdiction to protect its rights and interests pending the arbitration proceedings.
- The costs and expenses incurred in the dispute resolution process, including arbitration fees, shall be borne as determined by the arbitrator, taking into account the dispute’s circumstances and the Parties’ conduct.
- The Arbitrator may pass the ex-parte order if either party disrupts or remains absent from the arbitration proceedings, and such order shall be binding upon both parties.
The Registration fee if any, and the stamp duties in respect of the Demised Premises shall be borne by the TENANT.
IN WITNESSETH WHEREOF the parties hereto have herein unto set and subscribed their respective hands on the day and year mentioned hereinabove.
Signed, Sealed and Delivered by:
In the presence of Witnesses:
Frequently asked Questions
Is the landlord/lessor liable to pay GST when the residential property is rented for commercial purpose?
- If the residential premises are used for commercial purposes, it shall not come within the purview of the residential dwelling as per the Notification No. 05/2022-Central Tax (Rate) dated July 13, 2022.
- Supply of service i.e. renting of residential property for commercial use is covered under SAC 997212 and is taxable at the rate of 18 percent.
- Therefore, a landlord/lessor is supposed to pay GST at the rate of 18 percent on a forward charge basis.
- GST under the Reverse Charge Mechanism is not required to be paid as per the terms of the notification.
How to evict a tenant in India?
If the Tenant has failed to observe the terms and conditions or obligations as per the contract, the following steps has to be taken in order to get him evicted from the rented property;
- Eviction Notice– An eviction notice has to be filed in the court of competent jurisdiction stating the reasons of eviction and the time period within which such eviction needs to be executed. This notice is then served to the Tenant. A reasonable time shold be provided to the tenant to vacate the rented property.
- Eviction Suit– If the tenant refuses to vacate the rented property even after the legal notice issued by the court of law and decides to challenge it, then the landlord/lessor may hire a property lawyer to file an eviction suit against him.
- Final Eviction Notice-The court after hearing both the sides shall issue a final eviction notice to the tenant based on the evidences and arguments regarding it. Once the final eviction notice is issued by the court, the tenant has to vacate the rented property.