Are you one of those people who have ever let out a property on lease or stayed in rented accommodation? If yes, then you must be aware of a lease agreement. You must also have also noticed that rent agreements are only for eleven months. Have you ever wondered why it is essential to have a rental agreement and why it’s made for 11 months only? Today, in this article we will tell you everything about rent/lease agreements.
What is a rent agreement?
A document that defines the legal relationship between a landlord and a tenant, stating clearly the obligations of the parties to the agreement is called a rental agreement. The terms and conditions that are mentioned in the document are binding on both parties.
Importance of a rent agreement
A rental agreement depicts the terms and conditions on the basis of which a property is being let out. It consists of:
- The security deposits
- The monthly rental amount as agreed upon by the parties to the contract
- The notice periods
- The description of the property to be let out
- The purpose for which the said property will be used
- The proposed term of the agreement
- The circumstances which may lead to the termination of the said agreement along with other vital inclusions if any
It is made to safeguard the interest of both parties. The rental agreement can also be produced as evidence in case of a dispute arising out of the property.
According to Mr. Sandeep Tibrewal, a Noida -based property dealer:
“Rental Agreement is basically a documentation of the terms mutually agreed between the owner and the tenant, to avoid potential disputes in the future. It is a mandatory requirement by a majority of gated societies nowadays which enables the tenant to avail all the benefits that the society provides”
Why rental agreement is for eleven months?
As per the Registration Act 1908, it is necessary and compulsory to register a property let out on lease for a year. So, to skip the hectic and long process of registration, rental agreements are usually drafted for a period of eleven months. Any extension beyond that will need the property to be mandatorily registered under the Act.
Moreover, a rental agreement of 11 months, gives much more flexibility to the landlord as the amount can be set based on the ongoing market scenario and periodic renewal is also possible.
However, it is not mandatory for the agreement to be for eleven months. Renewable or Extendable rental contracts can also be made for three to five years as mutually decided by the parties to the agreement.
Will the 11-month rent agreement be valid in court?
Yes, an 11-month rental agreement is permissible in a court of law as a piece of evidence. These rental agreements are made on Rs 100 stamp paper and are to be notarized.
No registration is required if the rental agreement by the landlords or tenants is less than 12 months. So, there is no stamp duty payable on such lease agreements. But for rental agreements that are for more than one year, it is compulsory to stamp them and pay the charges.