by Rajesh Mourya
When a home is rented out, a tenancy agreement that outlines the terms and conditions that both parties have agreed upon is crucial for outlining the specifics of the landlord-tenant relationship. If not handled carefully, the document may give rise to a dispute in case of any disagreement.
The terms and circumstances of a lease or rent partnership between two parties are spelled out in an official document called a tenancy agreement. A person who is permitted to inhabit a property in accordance with the rules outined in the rent agreement (Tenancy Agreement) is referred to as a tenant. However, there are several kinds of contracts available for renting or leasing of a property. The Indian Easement Act governs leave and licence agreements, whereas the Rent Control Act governs rental agreements. Landowners should be aware that they may be held liable if a tenant poses a harm to society as a whole and there is no written tenancy agreement in existence. A deeper examination will reveal the specifics and significance of each such document.
Types of tenancy agreements
Basic information found in a rental agreement includes the name of the property’s owner, the renter, the conditions of the agreement, and the amount of rent due during the tenancy. The following three types of tenancy agreements are common in India.
- Rent agreement
- Lease agreement
- Leave and Licence agreement
Rent agreement
A rent agreement is a formal contract between a landlord and a prospective tenant who wants to temporarily occupy a certain property. The contract includes information such as the names of the parties involved, the property’s description, the agreed-upon rent amount, late payment fees, a grace period, the amount of the security deposit, the facilities that the tenant is permitted to use or not, the availability of parking, repairs and maintenance rights, and property insurance, among other things.
In India, the rent agreements are normally for a shorter period of time -11 months. A clear agreement such as a rental agreement allows for a hassle-free resolution between the parties. It is optional to register a rental agreement. Registration should not be confused with notarisation, which solely serves to certify a document and has no legal force.
Rent agreements are important so that, in the event of a breach, the parties may rely on their provisions and turn to the courts for the necessary relief. A tenancy arrangement must be for at least l1 months.
However, if it has been more than 11 months, the agreement must be legally registered in order for it to be used as evidence in court. The Transfer of Property Act, Specific Relief Act, Evidence Act, and Registration Act are crucial legislation that govern tenancy agreements.
Lease agreement
For extended periods of occupation, a lease agreement is typically necessary. Landlords desire to lease out their properties to minimise the swings in their reliable revenue. The lease agreement is a contract between the landlord and the tenant that grants the tenant the right to use the relevant property for the specified period of time (often more than 12 months). A lease agreement, as opposed to a rent agreement, often binds the landlord and the tenant for the specified time period. Some leases have a 99-year term. A lease also generates an interest in the property, is transferable, and creates rights that may be inherited.
The mutually agreed-upon lease agreement assures that, unless otherwise specified, the lessee will not evict the property. An alternative is to deliver a legal notice to the lessee. A lease document has to be stamped and registered in order to be upheld in court (in the event of disputes).
One drawback of leasing agreements is that if the market value of the property improves over the predetermined lease time, the lessor may miss out on extra income.
When the property to be leased is in one area of the country and the landlord’s house is in another, it might be challenging for him to finalise the lease deed. In this situation, they can sign a Power of Attorney (PoA) in the name of an acquaintance who lives close to the property and receive the rent on their behalf. According to tenancy law, the landlord is the one who receives the rent. In the event of a disagreement, the person designated to receive the rent may take all legal steps necessary to enforce the Agreement, either by having it precisely implemented or by having the property evicted by initiating the requisite legal actions in a court of law.
Leave and Licence agreement
Contrary to lease and rent arrangements, the Leave and Licence agreement is controlled by the Indian Easement Act of 1882. The licence holder occupies the property of the licensor pursuant to a leave and licence agreement. The property is, however, issued in accordance with the leave and Licence agreement and not on the basis of tenancy, so if this permission were not granted, the property right would be void.
With this framework, evicting the occupant is simpler than with a lease. These contracts almost never offer the rights to occupy a space; only the licence. The conventional landlord-tenant relationship is not established, and the property owner always has the advantage in the removal of the occupant at any
moment.
A lease agreement creates a right (interest) in the property and is transferable, however a Leave and Licence agreement does not, which is how this document differs from a lease agreement. While a licence does not grant such rights, a lease does create inheritable rights. A Leave and Licence agreement gives permission to inhabit the property, but a lease establishes exclusive rights to the real estate in question. Furthermore, unlike leasing agreements, these contracts are revocable.
Type your comment…
