5 must have clauses in online Rent Agreement

5 must have clauses in online Rent Agreement

5 must have clauses in online Rent Agreement

Rent Agreement

Often known as the Rental Agreement, or Leave and License Agreement. Because of high property prices & floating population, the demand for property on rent is always massive. I illustrated in my previous post on Real Estate. You have to take a house on rent to reap these benefits:). The Landlord and the Tenant sign a tenancy agreement. Rent Agreement can signed on a regular stamp paper of Rs 100 / Rs 200. In some places like Mumbai, most of the Rent Agreements are registered in sub-registrar office. Cost of registration is equally borne by the owner and the tenant. Format of Rent Agreement is normally standard and brokers are Single Point of Contact for same. I observed that tenants don’t give too much importance to Rent Agreement clauses. As a thumb rule, you must check clauses of agreement you are signing even if it is short term agreement or not of much relevance. To avoid any future dispute it is important to include following 11 Clauses in Rent Agreement.

1. Security Deposit:

For different cities, value of security deposit is different i.e. no of times the monthly rent. In Mumbai, 10 months security deposit is must whereas in NCR, security deposit of 5-6 months is OK. This security deposit is refundable but i observed that in some cases there was dispute on the same. In Rent Agreement, it was not clear whether security deposit is refundable or non-refundable. You should always mention that “Security Deposit is Refundable“. You may ask for separate payment receipt of security deposit with details of cheque no, date and signature of the owner.

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2. Rent is Prepaid or Postpaid:

Another grey field found in the rent agreement. One of my clients just vacated the flat and last month the owner requested rent. He had the feeling he was paying advance rent as he paid a month's rent before he moved into the house. Lastly, after so much trouble and pulling all the bank statements out, he showed that the rent was paid beforehand. In Rent Agreement, it is usually mentioned that rent will be paid on or before 5th of every month. After some time tenant lose track. You should always mention in Rent Agreement whether Rent will be paid in advance or after the month is over.

3. Lock in Period:

Owners of these days are insisting on lock-related provision in rent-agreement time. Normally Lock in Duration is 6 months but in future the provision is smartly included to retain lock for renewal of Rent Agreement. Ideally there should be no lock in the rent agreement in the time and the owner / rentor should serve a month notice to vacate the apartment.

4. Penalty for delay in Refund of Security Deposit:

This is the main pressure point any tenant can get security deposit refund. Typically amount is huge and owner's usual reason is that he has spent the amount and will repay it within a month. The worst thing is that when the landlord learns that the tenant goes out of town, it is done purposely. In Rent Agreement, it should be clearly mentioned that security deposit is due at the time of peaceful possession to the owner by the tenant. If owner fails to refund the security deposit then tenant can retain the possession of flat without paying any rent. Owner is also liable to pay compensation of Rs 1000/= per day till security deposit is refunded for causing inconvenience to tenant.

5. Maintenance Charges:

Another point of dispute. It should be clear in Rent Agreement that who will bear the maintenance charges and whether it is included in rent or not. It is beneficial for owners to keep maintenance charges separate from rent as it will help in taxation purpose. This arrangement will reduce their income from house property. For example, if rent is Rs 20k and maintenance is Rs 3k. In case owner charge Rs 23k as a rent then this amount will be income from house property. Suppose maintenance is charged separately then income from house property is Rs 20k.

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