Rent Deed Drafting
What is Rent Agreement?
Rental agreement is actually a contract between two parties. One is the owner of a property and the other one is the tenant, when he wants to have possession of the owner’s property for a certain period of time. A rental agreement is also called a rent deed or lease deed. The agreement contains the details of the property, the owner’s name and the tenant’s name, the term of the rent or lease and the monetary amount of the rent for the said period of time.
Why is the rent agreement for 11 months?
Usually most of the agreements are signed for 11 months in order to avoid stamp duty and other charges. As per the registration act, 1908 the registration of a lease agreement is essential in case of the lease term is more than 12 months. Once the agreement is registered, stamp duty and registration fee have to be paid for the same. For example, in Delhi, for a lease up to 5 years, the stamp paper value is 2% of the average annual rent. If a security deposit is a part of it, then add a fee of Rs 100. For a lease of more than 5 years and less than 10 years, the cost is 3% of the annual average rent. For a lease of more than 10 years and less than 20 years, the cost is 6% of the average annual rent. The stamp paper can be made under the name of the tenant or the landlord. Also, a registration charge of Rs 1,100 has to be paid by demand draft.
Terms commonly included in a Rent agreement
- • Duration: The rent agreement will be effective for this period.
- • Rent: The amount of payment made by the tenant to the landlord for the specific property.
- • Lock-in period: Either party can not terminate the agreement during this lock in period. It is the minimum duration to make sure neither party changes its mind and backs out after the agreement is issued and other party faces loss. This lock in period must be specified in the agreement.
- • Deposits: The deposit amount is required for rental agreement. The purpose of the deposit and conditions of return of the deposit after the completion of rental period is mentioned in the agreement.
- • Utilities: The utilities that are included in the rent and the utilities the tenant is responsible for.
- • Insurance: If the tenant is bound to insure the property. This term is often used in commercial rental agreements.
- • Repairs and Maintenance: Whether the landlord or the tenant- which party is responsible for the repairs and the maintenance of the property.