Thursday, February 26, 2015

Rental Agreement What To Include

Posted by Suhel Sayyad
Buying a property from an investment point of view serves you well as it gives you capital appreciation, regular income in the form of rent, acts as hedge against inflation and is a good asset for your retirement. However, it is easier said than done. The complicated and varied degrees of rent laws in India have equally troubled both owners as well as tenants. Hence, it is advisable to take help of property experts before finalizing the rent agreement and signing on the dotted lines. You can either opt for a good lawyer or take help from reliable online real estate portal like Housing.com, which has an in-house legal team having expertise in property laws in India. Selecting a lawyer can be a tricky proposition, as not all of them are property experts. Therefore, it is best to go with an expert like Housing.com, which has high proficiency in this domain. They can guide you through each aspect of rental contracts right from the rent agreement format to state specific clauses along with the calculation and payment of stamp duty. Here are the other points to be included in Rental Agreement –

Rental Agreement What To Include

Basic terms and conditions

Each leave and license agreement must contain all basic terms and conditions including the name and addresses of both landlord and tenant as per the supporting documents. It must also state the rental conditions along with the duration for which the contract is valid. However, as far as possible avoid auto-renewal clause as it serves well to both parties.

Clause related to rent

The Rental Agreement must also specify all details related to rent and there should be no ambiguous clause. This includes the monthly rent to be paid, the mode of payment which could be cash, ECS or cheque, the time of payment, that is, if the rent has to be paid in advance of each month or at the end of month. At the same time, it must also include a clause which states that an owner should issue a rent receipt. This is important for an occupant to get the tax benefits.

Include all sections pertaining to security deposit

It is important that the rent contract lists out all clauses related to security deposit in detail, as it is a root cause of most disputes between the owners and the occupants. The security deposit is the amount to be paid by occupant and should be a minimum of one month’s rent. The ideal agreement should include the exact security amount in rupees and the time at which it needs to be paid by the occupant that is either before taking possession of the property or within a stipulated time of moving in. It must also include all terms and conditions under which this amount can be forfeited partly or fully by the owner along with the clause that clearly states the time and mode by which this money will be refunded by the owner on completion of the agreement term.

Miscellaneous clauses

The rent agreement, in addition to all pointers mentioned above should also include the clauses related to available facilities and notice period for terminating the contract.