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Don't download a rent agreement from the Internet or sign blindly on one prepared by the broker.
The pumbai Police has issued an advisory to property owners saying landlords must do proper checks before renting out their place.
It adds that the landlord must immediately furnish the tenant's particulars online on the citizen portal Mumbaipolice.gov.in.
"Tenant verification must be done to safeguard the landlord's interests and ensure that the property is being rented out to the right person. Doing a background check is mandatory under Section 188 of the Indian Penal Code, and failure to do so is a punishable offence," says Akhil Gupta, co-founder and chief technology officer, NoBroker.com.
In addition to police verification, a properly drafted rent agreement can help safeguard the landlord's interests.
Three types of agreements
Three types of agreements between landlord and tenant are popular: Rent agreement, lease deed, and leave and licence agreement.
Pratyush Miglani, managing partner, MVAC, says, "Rent agreements are, usually, short-term, legally binding agreements between landowners and tenants, which allow the latter to occupy the owner's property.
"Such agreements are usually revised and renewed monthly."
When the tenure of occupation is long, owners and tenants usually sign a lease deed or agreement.
Abhinay Sharma, managing partner, ASL Partners, says, "Lease agreements are usually signed for a longer duration. If it is for more than 11 months, then registration is mandatory."
The third type of agreement is leave and licence.
This is a contract wherein the licensor grants the licensee the right to use the premises for a specified period, typically 11 months.
Gautam Sahni, partner, Vesta Legal. says, "Leave and licence agreement is a legally binding document which outlines the terms and conditions agreed upon between a licensor and a licensee for the grant of the licence."
Here, the licensor grants the licensee a temporary right to occupy and use the immovable property, without (in law) parting with its possession.
Sahni says, "A licensee merely receives a permission granted by the property owner to occupy and use it.
"A lease, on the other hand, entitles the lessee or tenant to exploit the immovable property and receive the same benefits that the landlord is entitled to."
Don't miss out on key clauses
Whatever the form of the agreement between the landlord and the tenant, it must include a few key clauses.
One, it should clearly mention the amount of rent the tenant needs to pay each month and the due date by which it must be paid.
The agreement should also mention the security deposit the tenant needs to pay.
While there is no set formula, in most cases it equals one or two months' rent and is decided by mutual consent.
The agreement should also mention the amount that will be refunded.
Gupta says, "When the tenant vacates, many landlords deduct some amount from the deposit to get the house painted. This amount should also be mentioned in the agreement."
Gupta adds that the agreement should also mention the period for which the property is being rented, the terms of renewal, other payments, list of fittings and fixtures, and so on.
The lock-in period and termination clause should also be mentioned.
Suvigya Awasthy, associate partner, PSL Advocates & Solicitors, says, "The rent agreement should clearly mention the consequences if the rent agreement is terminated within the lock-in period."
Enlist a lawyer's services
A well-drafted agreement should clearly spell out the rights and obligations of both the landlord and the tenant to avoid misunderstandings and disputes in the future.
Don't download an agreement from the Internet or sign blindly on one prepared by the broker.
Anushkaa Arora, principal & founder, ABA Law Office, says, "Get the terms of the agreement drafted by an advocate who is well versed with the concerned laws."
The agreement must be registered.
Sahni says, "The licence agreement or lease deed must be registered in accordance with the provisions of the Registration Act, 1908."
The registration cost and the stamp duty should be borne equally by both the parties.
According to Gupta, failure to do so might lead to unwanted legal action. Before renting, the landlord may also check the tenant's credit score with the latter's consent.
Feature Presentation: Ashish Narsale/Rediff.com
