AKSHAY KSHIRSAGAR
RENT AGREEMENT FORMAT FOR RESIDENTIAL AND COMMERCIAL
By Adv Akshay Kshirsagar on 28th September 2022
What is Rental Agreement
A rent agreement format is a legal document or contract between landlord and tenant. This agreement is for fixed period for possession of property by the tenant for fixed consideration. Generally, standard period of rent agreement is 11 months preferred by tenants and landlords.
However, upon expiry of agreement both parties can renew the agreement if they wish to do so. Terms and conditions of agreement can be rectified or changed as per understanding between both parties.
Important Clauses for any Rental Agreement Format
Security Deposit
Security Deposit depends on the type of property (furnished or semi-furnished) and the city where the property is located. Rent agreement should include deposit received with bank or cheque ref no. Also, the clause should mention the security deposit as refundable. The Owner can include recovery from deposit clause in case of any damage done to property or in case of non payment of rent.
Rent Amount and Payment Due
Rent agreement format should include rent payable amount and due date of payment. It should also clearly state whether rent is in advance or after month is over. If there can be any increase in rent after certain period, your rent agreement format should specify the same.
Penalty for Delay in Rent or Refund of Security Deposit
Many time tenant makes excuse for paying rent or do not answer your calls or landlord do pay the refundable deposit on time may result disputes between the parties. This situation arises when there is no provision for penalty for non payment of rent or security deposit timely in rent agreement format. Tenant or Owner should insist on including this clause to avoid disputes.
Termination of Agreement
Rent agreement can be terminated if tenant or owner wants to vacant the flat OR in case of dispute. This clause should specify the time period to inform or intimate either party to vacant the property. Sufficient time should be given to both parties and if any rent to be taken in advance for immediate vacant.
Maintenance Charges
Owner should specify the liability of paying maintenance charges in agreement. Whether maintenance charges is included in rent or need to be paid separately by tenant. It is beneficial for landlord to recover maintenance charges separately from rent as it will help in reducing taxable income.
Property Tax and other Taxes.
Property tax is generally paid by owner, so tenant should insist on including the clause of paying all taxes by owner of property. If owner intends to charge all taxes to tenant then same can be specified in rent agreement to avoid dispute.
Damages and Repairs
Tenant should check all assets are in working condition upon entering in rental agreement and upon leaving possession of property should handover all assets of landlords as received. If any of asset or part of property is damaged, owner can recover same from deposit or charging extra with rent. Any repairs or change in structure should be inform to owner in advance.
Property Use
Owner should specify the intent use of property in rental agreement. If property is specified for residential use, then should be restricted for any commercial activities in property.
Importance of Rental Agreement
1. Absence of Rent Agreement
Owner can evict tenant without notice period, landlord can raise rent as per his wish or tenant can vacant the property without informing owner or can also damage the property or run a commercial business. Rent agreement is essential and beneficial to both parties.
2. Unregistered Rent Agreement
It is advisable to register your rent agreement as it can help tenant to prove address proof for KYC purpose. It is responsibility of owner to register rent agreement to protect his rights. However, if tenure of lease is less than 12 month then there no compulsion on registration of agreement.
3. Eviction
Without valid reason landlord cannot evict tenant. Supreme Court in the case Anthony versus KC Ittoop and Sons passed an order that a landlord cannot eject a tenant for at least five years, if the tenant has been paying the rent regularly as per the agreement between the two parties. However, if the landlord wants to use the premises for his personal use, he is free to throw the tenant out.
Rent Agreement Format Download
Disputes with Landlord and Tenant
Many times tenant refuse to vacant the possession of property even after expiry of rent agreement. Some tenant do not pay rent because of their financial condition.
Landlords cannot remove tenant directly form possession by police force or by any other force. He needs to file eviction suit to evict tenant from the property. But eviction suit is time consuming and costly process. Average litigation process in eviction is around 2-3 years.
Tenants may have history of illegally occupying the possession so they do this frequently with landlords. Hence, we encourage landlords to conduct police verification before handing possession to the tenant.
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