Contents of a rental agreement
The contents of a rental agreement varies from place to place. However, the usual contents of a rental agreement include:
- Names of the landlord and tenant and/or their agents.
- Description (Address) of the property.
- Amount of rent and due dates for payment, grace period, late charges.
- The person responsible for the payment of any other amount such as property tax, TDS (if applicable), property repair changes, society/flat maintenance changes, water bill, electricity bill, etc.
- Mode of rent payment.
- Methods to terminate the agreement prior to the expiration date and charges if any.
- Amount of security deposit and the account where it is held.
- Utilities furnished by the landlord and, if the landlord charges for such utilities, how the charge will be determined.
- Facilities in the premises which the tenant is entitled to use such as swimming pool, security systems etc.
- Rules and regulations such as pet rules, noise rules and the penalty for violation.
- Identification of parking available, including designated parking spaces, if provided.
- How tenant repair requests are handled and procedures for emergency requests.
Terms commonly included in a Rent agreement
- Duration: Period for which the rental agreement will be in effect.
- Rent: The consideration amount or payment made by the tenant to the landlord in exchange for the property rented out.
- Deposits: The amount of deposit required (if any), the purpose of each deposit, and conditions for return or adjustment of deposit at the end of the rent period.
- Terms of use: The purpose for which the property is to be used and terms and conditions regarding the usage of the property.
- Utilities: Which utilities are included in the rent, and which utilities the tenant is responsible for.
- Insurance: Whether the tenant is required to insure the property – this is most often used in commercial rental agreements.
- Repairs and maintenance: Party responsible for repairs and maintenance of the property – landlord or tenant.
- Termination: The period when the rental agreement ends. It may end due to notice by one party to the other for ending the rental period or due to the end of the duration of the contract. When the agreement ends or terminates, the rent period also ends, and the final settlement of dues between the parties regarding the property, such as the return of advance amount, payment for damages, etc., will be made.
Security deposits
In India, security deposit or advance is also paid by the tenant to the landlord which is to be repaid at the time of cancellation of the rental contract. Usually, it is calculated anywhere from 2 or 3 months to up to 10 months of the rent.
Security deposits are given at the time of signing the contract. A part of the security deposit can be used by the landlord towards any damages caused to the furniture, appliances, electrical, or the property itself, by the tenant.
After deducting the security deposit towards damages and painting of the property, the landlord must return the remainder of deposit to the tenant, at the time of cancellation or termination of the contract.
Procedure to Make Rental Agreement
Below is the process for making a rental agreement:
Step 1: Draft the rental agreement and review of the agreement by both parties, i.e. owner and tenant.
Step 2: Finalise the draft rental agreement and print it on stamp paper obtained from a Sub-Registrar's office.
Step 3: Ensure the owner, tenant, and two witnesses sign the rental agreement.
Step 4: Get the agreement registered at the Sub-Registrar's office if the duration of the rental period is more than 11 months.
Step 5: Make a photocopy of the signed (in case of 11 months rent) or registered (in case of more than 11 months rent) rental agreement and give a Xerox copy of the agreement to the tenant.
Documents Required for Registration of Rental Agreement
The general documents that must be submitted by the landlord, tenant and witnesses for registration of the rental agreement are as follows:
- The proof or evidence of ownership of the rented property (title deeds of the property having the name of the landlord)
- Property documents such as tax receipt of the property to be rented out
- Passport-sized photographs of each of the parties and the witnesses
- Address proof of both parties and witnesses (Passport, Aadhaar card, ration card, bank passbook or driving license)
- Route map of the property to be rented out, if required
- Any other document specified by the Sub-Registrar's office.
How to Execute a Valid Rental Agreement?
According to the Registration Act of 1908, the registration of a rent agreement is mandatory if the duration of the rental agreement is 12 months or more. However, if the duration of the rental agreement is 11 months or less, there is no requirement to register the agreement. In such a case, drafting and signing the agreement on the stamp paper will be valid as per law.
In case the agreement duration is 11 months or less, the rental agreement needs to be printed on a stamp paper obtained from the Sub-Registrar office of the place where the property is situated. After the rental agreement is printed on the stamp paper, each page of the stamp paper must be signed at the bottom by both the owner and tenant. Two witnesses must also sign the agreement along with their names and addresses to make the agreement valid.
In case the agreement duration is 12 months or more, the rental agreement needs to be printed on stamp paper and it needs to be registered with the Sub-Registrar’s office of the area where the rented property is situated. The landlord and tenant must be present at the Sub-Registrar’s office to execute the agreement. They must sign at the bottom of each page of the stamp paper on which the agreement is printed in the presence of the Registrar. Two witnesses must also sign the stamp paper and it should be registered after paying the required fees.
Rental Agreement Sample
Below is an example of a rental agreement executed on e-stamp paper:
E-Stamping of Rental Agreement
In some states, the e-stamping facility for rental agreements is available. Where the e-stamping facility is available, the parties need not buy the stamp paper from the Sub-Registrar office to print the rental agreement. Instead, they can log on to the Stock Holding Corporation of India Ltd (SHCIL) website and check if the state where they reside offers this facility.
Presently, Assam, Himachal Pradesh, Gujarat, Karnataka, Delhi-NCR, Maharashtra, Uttarakhand, Tamil Nadu and Uttar Pradesh allow e-stamping of rental agreements. However, e-stamp paper cannot be directly purchased from the SHCIL website.
If the state where the parties reside offer e-stamp paper, they need to purchase the e-stamp paper from the allotted centres in their respective cities. After purchasing the e-stamp paper, the rental agreement must be printed on it. When the duration of the agreement is 11 months or less, the signature of the parties and the witnesses on the e-stamp paper on which the rental agreement is printed will make the rent contract valid and binding on the parties.
When the duration of the rental agreement is 12 months or more, the parties must print the rental agreement on the e-stamp paper, go to the Sub-Registrar’s office, put their signatures and get it registered for the agreement to be valid and binding on them.
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Frequently Asked Questions
What is the stamp duty to be paid on the stamp paper?
The rental agreement should be printed on a stamp paper of a suitable stamp value according to the Stamp Act of the respective State to make it legally valid. Thus, the stamp duty varies from state to state.
Is notary mandatory for rental agreements?
No. In India, it is not mandatory to notarise the rental agreement. Registration of the rental agreement is sufficient for it to be valid and binding on the parties.
Who keeps the original rental agreement?
The landlord of the property keeps the original copy of the rental agreement. However, the tenant will have the xerox of the rental agreement copy as it helps the tenant to go through the agreement terms in case of disputes.
Is there any e-lease that can be executed between a distant landlord and tenant?
Usually, the lease agreements are for a period of more than 11 months. Lease agreements are made for a duration ranging between 3-10 years. Any lease agreement executed for more than 11 months has to be registered to be valid. For registration of the lease agreement, the landlord and the tenant have to be present in the Sub-Registrar’s office.
However, if the lease agreement period is for 11 months and e-stamp paper is available in the city where the property to be leased is located, then the lease agreement can be printed on the e-stamp paper which can be sent to the distant landlord/tenant for putting his/her signature. The signature of both parties will make the lease agreement valid when it is for a period of 11 months.
Can the notice period for early termination of the rental agreement be 3 months?
Yes, generally, the notice for termination of rental agreement is between 1 to 3 months. The rental agreement can be terminated by either party and the tenant can vacate or be asked to vacate after the expiry of the period of the termination notice. However, giving the termination notice for vacating the premises before the expiry of the rental agreement is necessary. There is no necessity to issue a termination notice when vacating the premises on the date of the expiry of the agreement.
Why 11 months rent agreement?
The rental agreement need not be registered when it is for a period of 11 months. Just putting the signatures of the landlord, tenant and witnesses on the rented agreement printed on the stamp paper are sufficient to make it valid and binding on the parties. To avoid the formalities of registration, rental agreements are made for 11 months and extended after the expiry of 11 months for another term of 11 months.
Is an oral rental agreement valid?
Yes, oral rental agreement is valid. However, the rental agreement is generally in written form and drafted on stamp paper. It is essential that a rental agreement is written as it helps to prevent conflict between the landlord and the tenant. It ensures the safety of the property for the landlord as well as protects the tenants from dealing with any illegitimate demands by the landlord.
What is a valid rental agreement?
A valid rental agreement is an agreement which is drafted on a stamp paper and contains all the terms of the rent, such as rent amount, security deposit amount, mode of payment of rent, date of payment of rent, rent duration, termination notice, etc. It should be signed by the owner and tenant, 2 witnesses and registered (if the rent period is beyond 11 months) for it to be valid.
