Updated on: Dec 6th, 2023
14 min read
Anyone who wants to stay in a house on rent or get a property on rent, should enter into a rental agreement with the owner of the house/property. The rental agreement is an official contract entered between the tenant and owner of a property. Tenant is the person who wishes to take temporary possession of the owner's property by paying the rental amount. The tenant can stay/use the property of the owner for the time mentioned in the rental agreement.
A rental agreement, also called a rent deed and lease deed, contains basic details of the residential property, the owner of the property, the renter (or tenant, as he is also called), the term of the rental period, and the amount of the rent for the said term.
The rental agreement or rental contract is drafted on a stamp paper.
There are 2 types of rental contracts in India:
The contents of a rental agreement varies from place to place. However, the usual contents of a rental agreement include:
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.
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.
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.
The general documents that must be submitted by the landlord, tenant and witnesses for registration of the rental agreement are as follows:
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.
Below is an example of a rental agreement executed on e-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.
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.
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.
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.
In India, hotels like the Taj Group, Mariott and Grand Hyatt offer rooms on rent for long stays ranging from a week to a year or more. It can be taken on rent or lease. Even Oyo offers rooms on a rental basis. You can rent a hotel room by executing a rental agreement between you and the hotel management. The rental price, duration, hotel services that they provide for your room and amenities have to be discussed beforehand and clearly stated in the rental 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.
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.
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.
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