When property and land is used and enjoyed by the person in possession of it in exchange for consideration to the real owner, the property is said to be rented or leased. When property and land are given of a lease, it refers that the tenant or the lessee can use the property for a specific time frame for which he/she would be needed to pay a certain fixed amount of rent. When this time period increases to more than a year, a lease Deed must be registered.
What is a Lease Deed?
Its a written contract among a landlord (lessor) and tenant (lessee), which affirms that the landlord would get a periodic payment in exchange for allowing the tenant to use and maintain the property. This deed also describes the terms and conditions that dictate the relationship between a landlord and a tenant during the period of the lease.
A deed is usually required when the property is rented for a long period, ranging between 1-5 years or even longer. In such matters, it plays a crucial role to govern the relationship between the tenant and landlord and lays down the provisions legally binding over them.
A deed needs to be drafted by a good property documentation lawyer in India who can understand the major requirements of both the sides (landlord and tenant) and draft an unbiased deed that protects the basic interest of both the landowner and tenant. Consulting a documentation lawyer becomes more critical when the deed is needed for a commercial property like office, shop or factory.
Essential Contents of a Lease Deed in India
The essential provisions that must be included in deed are as follows:
- Description of land and property: The lease deed must contain the full description of the land and property like its area, location, address, structure, furniture, and fittings, etc.
- Duration: The lease deed must explicitly state the time for which the deed will be valid. This provision can also cover the information about the renewal of the lease deed if both parties want to continue and renew their contract.
- Rent, Maintenance, and Security: The total amount of rent, mode of payment, due dates, interest on delay in payment, security deposit to be paid, etc. must be specified in the agreement. It must also cover the details and responsibility for paying any maintenance charges, utility bills, society charges, etc.
- Termination of Lease: The agreement must reveal the reasons for which the lease agreement can be terminated. This may involve a breach of lease deed, use of the property and land for illegal acts, nuisance by the tenant, failure to pay rent, etc.
- Subletting: This deed must describe whether the tenant is allowed to sublet the property or not.
- Dispute Resolution: The agreement must specify the manner in which the legal disputes between the tenant and the landlord arising out of breach of the agreement will be dealt with. This may cover any ADR processes say Arbitration.
- Applicable Laws: This provision explains the laws which will be applicable over the lessor and lessee in case of any dispute and which court will have jurisdiction to deal with such matters.
The lease deed can be used in both residential and commercial leases. Though, a corporate agreement must be more detailed and also include the details of the business, indemnity, etc. A documentation lawyer in India can assist in drafting a customized lease deed in accordance with the type of lease deed.
Once the lease deed is drafted, it needs to be registered with the Sub-Registrar or Registrar of the district in which it is located. Moreover, a lease deed is only registered after paying the essential stamp duty, which differs from state to state. For example, In Delhi, lease deed registration is done by paying stamp duty at 2% of the average annual rent when the lease time period is for up to 5 years and 3% of the average yearly rent when the lease deed is for more than 5 years and up to 10 years.
Documents Required for the Registration of rent Deed in India
For registering a residential deed, primary documents are required such as:
- Lease deed
- Stamp paper
- Receipt of registration fees.
Moreover, for registering a commercial rent deed, the following documents are needed:
- Power of attorney and board resolution on company letterhead.
- ID proof like Driving Licence, Aadhaar Card, Passport, etc.
- Company PAN Card.
- Address Proof of the authorized signatory.
- Passports sized colored photographs of the authorized signatory.
- Company seal or stamp of the authorized signatory.