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IMPORTANT KEY POINTS FOR LANDLORDS TO REMEMBER AT THE TIME OF EXECUTING RENT AGREEMENT

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IMPORTANT KEY POINTS FOR LANDLORDS TO REMEMBER AT THE TIME OF EXECUTING RENT AGREEMENT
Important Key Points For Landlords To Remember At The Time Of Executing Rent Agreement


1. Place of Agreement: Agreement should be executed at the place where landlord resides as the landlord will not be able to file Suit/Case against the tenant in the Court near his/her residence, in case, the Rent Agreement is executed at the place of tenant which is in other district/state. In addition, to the place of Agreement, the Rent Deed/Lease Deed should contain a specific Clause in which, the landlord and the tenant agree to the jurisdiction of courts in the district of landlord, in case of a dispute.

2. The Lease Deed should mention the description of property rented out and the monthly payable rent alongwith interest free security and the manner in which the same is to be paid by the tenant to the landlord.

3. The period of lease should be specifically mentioned.

4. The lock-in-period, if any, should be specifically mentioned. The lock-in-period should mention to whom it applies, whether the tenant or the landlord and it should also state the consequences of termination of lease during the lock-in-period.

5. The Lease Deed should state the manner in which the Lease Deed can be terminated during the lock-in-period or after the lock-in-period. The notice period before termination is to be specifically stated in the lease deed.

6. The Lease Deed should mention the consequences on the part of tenant, in case of breach in terms of the Deed.

7. Most of the Lease Deed contains an Arbitration Clause which states that “in case of a dispute, in respect to any terms of the Lease Deed, the parties shall refer the matter for Arbitration”. It is advisable for the landlords to not incorporate an Arbitration Clause in the Rent Deed as it shall restrict the landlords to approach the court of law at the first instance, in view of Section 8 of the Arbitration and Conciliation Act, 1996. In case of an Arbitration Clause in the Lease Deed, the landlord/tenant raising a dispute shall have to invoke the said Arbitration Clause in the manner stated therein and the matter/dispute shall be adjudicated in the Arbitration proceedings which in fact, is expensive. In case, there is no arbitration clause in the Rent Agreement, the landlord, in case of a dispute, can directly approach the Court of Law for seeking remedy.

8. The Lease Deed should mention the consequences of tenant not handing over the possession to the landlord at the time of maturity of the lease period or at the time of early termination of the Lease Deed.

9. The Lease Deed should specify that the tenant will not be entitled for any relief due to any lock-down by the State Government/Central Government on account of any reason whatsoever including and not limited to Covid-19/Pandemic. (The Hon’ble Supreme Court of India in one of the judgment has observed that the tenants have enjoyed the property of the landlord at the time of lock-down and hence, are not entitled for any relief on account of monthly rents, in case, there is no specific clause giving waiver of rent on the said ground in the rent agreements).

10. The lease deed should be witnessed properly and the same should be registered before the Sub-Registrar of the District as non-registration of the Rent Agreement/Lease Deed shall restrict the landlord to refer the document before the Court of Law, in case of a dispute, as the same shall be liable for impoundment due to non-registration of the stamp duty and the same will delay the case of the landlord.

     The above information is based on personal experience and no part of this should be construed as providing legal advice for any purpose.


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