10 IMPORTANT CLAUSES OF RENT/TENANCY AGREEMENT

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10 IMPORTANT CLAUSES OF RENT/TENANCY AGREEMENT

The tenant, is a potent instrument that can be used and misused. The rent agreement or tenancy agreement, if formalised properly, helps the landlords and the tenant, and results in a good healthy relationship between the two.

The tenant, is a potent instrument that can be used and misused. The rent agreement or tenancy agreement, if formalised properly, helps the landlords and the tenant, and results in a good healthy relationship between the two. However, it should be formalised with all the provisions and necessary laws. Here, we are discussing 10 important clauses of a Rent Agreement in India:

1. Duly stamped & registered

It is essential that the rental agreement be registered. It will help protect your right as a tenant. To register, you will have to pay stamp duty and registration fee. Stamp duty varies from state to state and is also dependent on the tenure of the rental agreement. A rental agreement should be duly signed by both tenant and landlord, and mention the date. This should be done in the presence of two witnesses.

2. Essential details

It should have the legal names of both the parties -- the landlord and the tenant -- and the start and end date of the agreement.

3. Rent-related information 

The rent paid per month and the date on which it should be honored should be mentioned in the agreement. This should illustrate the mode of payment and a penalty clause in case of late payment. Check for any rent-escalation clause which might lead to an increase in rent on the basis of market movement.

4. Payment of utility charges 

Make sure that your rent agreement specifies whether the amount of rent includes bills like electricity, water and gas. Does this amount include miscellaneous charges like club membership fee (if any) , society maintenance charges (if any) , garbage collection, maintenance charges (if any) , and parking charges (if any) .

5. Security deposit 

It is essential that a good rental agreement clearly indicate the amount of security deposit and that it will be refunded at the end of the agreement. It is important to know that every rent agreement has a damage clause. In case of damages, the landlord can deduct the amount from your deposit, which could go as high as 12 months' rent.

6. Conditions that can lead to eviction 

See the conditions mentioned in the agreement under which the landlord can ask you to vacate the house. This usually comprises situations like 'material breach' of the agreement. This includes disturbing neighbours, causing damage to the building, failure in making payments, among other things. This section needs to be ascertained so that you know that you are not defaulting.

7. Revision of rent  

The model tenancy law specifies that landlords cannot increase the rent in the middle of the term. They need to provide a written notice, three months in advance, before revising the rent. They can increase the rent if they have borne expenses due to improvement, addition, or structural alteration that does not include ‘repairs’.

8. Notice period

It is essential for your agreement to specify the notice period and penalty clause, if any, in a situation of eviction due to default. In case of lower rental properties, the notice period is usually 30 days. For high rental ones, this period could go up to 60 days.

9. Property's condition at the time of renting

As a practice, always check the condition of the property before renting. It is great to include a clause that states the condition of the property in detail at the time of renting. It should give room-by-room description.

10. Termination Clause in Rental Agreement

A rental agreement should also include a clause allowing the tenant to terminate the agreement. It binds the tenant and the landlord, to do what is mentioned in the contract. That is, if the document mentions that a notice period of two months should be served, then, both the parties must adhere to it.

 

About the Author: Siddharth Saha is a Legal Assistant at Padhy and Co. Advocates, Bhilai (Chhattisgarh).