How to draft a Rent Agreement
Introduction A rent agreement or rental agreement is a legally enforceable document between a landlord/lady and a tenant which lays down premeditated terms and conditions under which the former rents his or her property to the latter. When the owner of a property temporarily transfers possession of the property to another person in exchange for a consideration, it… Read More »
A rent agreement or rental agreement is a legally enforceable document between a landlord/lady and a tenant which lays down premeditated terms and conditions under which the former rents his or her property to the latter. When the owner of a property temporarily transfers possession of the property to another person in exchange for a consideration, it can be said that he has rented the property. Such a transaction may give rise to several legal complications if left unregulated. Thus, rental agreements play an important role when it comes to attribution of responsibilities and liabilities with regards to the rental property. A well-drafted rental agreement ensures a smooth and profitable transaction to both- the landlord as well as the tenant. Let us look at the ingredients of a rental agreement followed by a sample of the same to understand the nitty-gritty of drafting of a rental agreement.
The common clauses found in a rental agreement are as follows:
- Commencement and expiry of the agreement and its renewal thereof- This clause explicitly specifies the rental period and provides for the conditions for its renewal upon expiry of the specified period.
- Lock-in Clause- It is generally recognized that a rental agreement must contain a lock-in clause which provides for the lock-in period. A lock-in period is a stipulated period during which neither of the parties is allowed to terminate the agreement. The clause must also provide for the remedy available to the aggrieved party in case the other party breaches the lock-in period. Thus, it protects the interests of the tenant as well as the landlord.
- The monthly rent and other charges- The rent agreement should expressly specify the amount of rent that is to be paid monthly by the tenant to the landlord. In furtherance to this it should also specify the day of the month, on or before which, the rent is to be paid. In addition to the monthly rent, there may be extra charges such as charges for maintenance of the property, bills for electricity, water, gas and other utilities that have to be incurred by either of the parties. Such charges need to be expressly specified in the agreement and the party which is supposed to incur them must also be mentioned along with it.
- Fittings and fixtures- The rent agreement must contain details regarding the fittings and fixtures in the property such as lights, fans, air-conditioners, furniture, etc. which has been provided by the landlord. It must also contain the condition in which such fittings and fixtures need to be returned to the landlord upon vacating of the premises by the tenant on expiry of the rental period.
- Repairs, alterations and additions- One of the most common points of dispute between landlords and tenants is pertaining to repairs in the rental property. Therefore, it is advisable to stipulate the liability for repairs in the rent agreement itself. For the aforesaid purposes, the general trend that has been observed is that repairs are divided into two types- minor repairs and major repairs. The tenant is made responsible for carrying out all minor repairs and the landlord takes the responsibility for major repairs. In addition to repairs, stipulation may also be made with regards to alterations and additions to the rental property. Generally, the tenants are not allowed to make major alterations to the property without the express consent of the landlord. Minor additions are allowed subject to the condition that, in case the tenant removes it upon expiry or termination of the tenancy, the condition shall be restored to what it was prior to when the addition was made.
- Permitted usage of the premises- The agreement must specify the restrictions on usage of the premises by the tenant.
- Government Taxes- Taxes may be imposed upon the rental property by the Government or any local authority during the tenancy period. It is generally advised to stipulate the liability to pay all kinds of taxes that are levied upon the property in the rent agreement itself to avoid any legal disputes in the future.
- Visiting Clause- The agreement must expressly specify the landlord’s right to visit the property during the tenancy period and the conditions for exercising the same.
- Registration- It is to be noted that only registered agreements are enforceable in a court of law. Rental agreements which have not been registered merely serve as a collateral piece of evidence. Therefore, it is always advised by experts to register the agreement, the clause for which should be included in the agreement itself. In India, the states have their own independent rent control laws. Thus, the procedure for registration of the agreement varies from state to state.
- Miscellaneous- Some rental agreements may contain other clauses depending upon the type and nature of the rental property. For instance, a jurisdiction clause may be included in a rent agreement to mutually decide the court of jurisdiction to which the disputes shall be subjected to.
In addition to the aforesaid clauses, the corpus of a rent agreement must consist of the details of the landlord, tenant and the rental property in the beginning of the agreement. It must end with the initials of the landlord and the tenant and two witnesses.
THIS RENTAL AGREEMENT is executed at place on this Date day of Month, Year by and between Name of the Landlord *, Resident of *Permanent Address of the Landlord (hereinafter jointly and severally called the “LANDLORD”, which expression shall include their heirs, legal representatives, successors and assigns) of the one part:
AND Name of the Tenant, having permanent address at Complete permanent Address of the Tenant, (hereinafter called the “Tenant”, which expression shall include its legal representatives, successors and assigns) of the other part.
WHEREAS Name of the Landlord the Landlord is the absolute owner of the Complete Address of the Property consisting Number of Bedrooms, living room, family lounge, kitchen, servant room and inbuilt fittings & fixtures and inventory of the equipments, hereinafter referred to as “Demised Premises”.
WHEREAS the Tenant has requested the Landlord to grant Rent with respect to the Complete Address of the Property and the Landlord has agreed to rent out to the Tenant the Property for residential purposes only, on the following terms and condition:
NOW THIS DEED WITNESSETH AS FOLLOWS:
- The rent in respect of the “Demised Premises” shall commence from *Starting Date of Agreement* and shall be valid till *Expiry Date of Agreement*. Thereafter, the same may be extended further on mutual consent of both the parties.
- That the Tenant shall pay to the Landlord a monthly rent of Rs. *Amount of rent in Numbers*. The rent shall be paid in advance [Monthly or Quarterly] on or before 7th of English Calendar Month.
- That the Tenant shall pay to the Landlord a monthly maintenance charge of Rs. *Amount in Numbers* towards maintenance of Generator & Elevator, Salaries towards guards, Charges for Electricity Maintenance for Common Areas, Charges towards cleaning of Common Areas and towards maintaining the lawn.
- That the Tenant shall pay for the running cost of elevator and generator separately to the Landlord.
- That during the Rent period, in addition to the rental amount payable to the Landlord, the Tenant shall pay for the use of electricity and water as per bills received from the authorities concerned directly. For all the dues of electricity bills and water bills till the date the possession of the premises is handed over by the Landlord to the Tenant it is the responsibility of the Landlord to pay and clear them according to the readings on the respective meters . At the time of handing over possession of the premises back to the Landlord by Tenant, it is the responsibility of the Tenant to pay electricity & water bills, as presented by the Departments concerned according to the readings on the respective meters upto the date of vacation of the property. The Landlord has provided names of the Equipments such as Microwave, Oven, Refrigerator, Washing Machine & Air-conditioners at the “Demised Property” and servicing & repair will be the responsibility of the Tenant.
- The Tenant will pay to the Landlord an interest-free refundable security deposit of Rs. Amount in Numbers equal to Number of Months Agreed in Negotiations vide cheque no _____________ dated __________ at the time of signing the Rent Agreement. The said amount of the Security deposit shall be refunded by the Landlord to the Tenant at the time of handing over possession of the demised premises by the Tenant upon expiry or sooner termination of this Rent after adjusting any dues (if any) or cost towards damages caused by the negligence of the Tenant or the person he is responsible for, normal wear & tear and damages due to act of god exempted. In case the Landlord fails to refund the security deposit to the Tenant on early termination or expiry of the Rent agreement, the Tenant is entitled to hold possession of the Rented premises, without payment of rent and/or any other charges whatsoever, till such time the Landlord refunds the security deposit to the Tenant. This is without prejudice and in addition to the other remedies available to the Tenant to recover the amount from the Landlord.
- That all the sanitary, electrical and other fittings and fixtures and appliances in the premises shall be handed over from the Landlord to the Tenant in good working condition. There will be 3 weeks maintenance period after the possession of *Name of tenant*. If during these 3 weeks any defect is in electrical outlets/appliances, plumbing/ sanitary is identified & duly notified, the Landlord shall be responsible to repair/ replace the same at his own cost. Upon returning the premises, all the sanitary, electrical and other fittings and fixtures will be restored by the Tenant in a good condition as they are at present, subject to normal wear and tear and damage by act of God.
- That the Tenant shall not sublet, assign or part with the demised premises in whole or part thereof to any person in any circumstances whatsoever and the same shall be used for the bonafide residential purposes only.
- That the day-to-day minor repairs will be the responsibility for the Tenant at his/her own expense. However, any structural or major repairs, if so required, shall be carried out by the Landlord.
- That no structural additions or alterations shall be made by the Tenant in the premises without the prior written consent of the Landlords but the Tenant can install air-conditioners in the space provided and other electrical gadgets and make such changes for the purposes as may be necessary, at his own cost. The Landlord represents that the Premises possesses the adequate electrical infrastructure to cater for the electrical appliances including the air conditioners. On termination of the tenancy or earlier, the Tenant will be entitled to remove such equipments and restore the changes made, if any, to the original state.
- That the Landlord shall hold the right to visit in person or through his authorized agent(s), servants, workmen etc., to enter upon the demised premises for inspection (not exceeding once in a month) or to carry out repairs/construction, as and when required, by giving a 24 hours notice to the occupier.
- That the Tenant shall comply with all the rules and regulations of the local authority applicable to the demised premises. The premises will be used only for residential purposes of its employees, families and guests.
- That the Landlord shall pay for all taxes/cesses levied on the premises by the local or government authorities in the way of property tax for the premises and so on. Further, any other payment in the nature of subscription or periodical fee to the welfare association shall be paid by the Landlord.
- That the Landlord will keep the Tenant free and harmless from any claims, proceedings, demands, or actions by others with respect to quiet possession of the premises.
- That this Rent Agreement has a lock-in-period of *Number of Months* months and cannot be terminated by either party. After the completion of lock-in-period, the Tenant can terminate the Rent Agreement by giving *Number of Month(s)* months notice to the Landlord or the rent in lieu of. Likewise, after the completion of lock-in-period, the Landlord can also terminate the Rent Agreement by giving Number of Month(s) months notice to the Tenant. That in the event of nonpayment of rent by the Tenant during the lock-in period being in arrears for 2 consecutive months despite reminder issued by Landlord on such rent the Landlord shall have the right to terminate the Rent with immediate effect and take back possession of the said premises.
- The Tenant shall maintain the Demised Premises in good and tenable condition and all the minor repairs such as leakage in the sanitary fittings, water taps and electrical usage etc. shall be carried out by the Tenant. That it shall be the responsibility of the Tenant to hand over the vacant and peaceful possession of the demised premises on expiry of the Rent period, or on its early termination, as stated hereinabove in the same condition subject to natural wear and tear.
- That in case, where the Premises are not vacated by the Tenant, at the termination of the Rent period, the Tenant will pay damages calculated at two times the rent for any period, of occupation commencing from the expiry of the Rent period. The payment of damages as aforesaid will not preclude the Landlord from initiating legal proceedings against the Tenant for recovering possession of premises or for any other purpose.
- That both the parties shall observe and adhere to the terms and conditions contained herein above.
- That the Tenant and Landlords represent and warrant that they are fully empowered and competent to make this Rent.
- In case of any dispute to this agreement and the clauses herein, the same will be settled in the jurisdiction of the Delhi civil courts.
- That the Rent Agreement will be registered in front of registrar and the charges towards stamp duty, court fee & lawyer/coordinator will be equally borne by the Landlord & Tenant.
IN WITNESS WHEREOF the parties hereto have executed these presents on the day and year.
(Full name of the Landlord) (Full name of the Tenant)
- Conveyance Deed of Sales
- Essential Elements of a valid Contract