This article is written by Abhishek Anand, pursuing Certificate Course in Introduction to Legal Drafting: Contracts, Petitions, Opinions & Articles from LawSikho.

Introduction

Renting a house is such a daunting task for someone who is moving to a big city for the first time. You do not know what you are signing up for. I also faced a similar situation when I signed a rental agreement when I moved to Delhi. That made me think; what are the legal protections which are given to tenants and landlords/ladies? What are the rights and obligations of tenants? Can a landlord/lady evict the tenants without notice? And many such questions. This research shall try to find out all such things which a person should keep in mind before renting a property. At the end of this article, there are links to rental laws for different states in India. 

Legal checklist for the landlord

1. Background of the tenants

The landlord needs to filter out the right tenants. The landlord should conduct a background check on the tenants’ prior behaviour, family background, and financial status.

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2. Police verification 

The landlord should get the tenants verified by the police. It helps the landlord to get saved from future legal trouble. This verification process can be done at the nearest police station. The police will then verify the tenant in person.

3. Rent fixed

The landlord must do a market check on the current trend before deciding on this amount. It would be tough to get a tenant if the landlord fixed it higher than the current trend. However, if the landlord intends to fix it at a greater price than the market rate, he should make sure that he can justify it by providing extra furnishings or other premium services such as automation or unique security equipment.

4. Clauses of the agreement

While drafting clauses of the rental agreement, the Landlord should clearly mention the following clauses:

  • Maintenance clause

The landlord should mention whether maintenance charges like water charges, electricity charges etc. are included in the monthly rent or not. 

  • Increment clause

The increment clause consists of an increase in the monthly rent after crossing the threshold period in a tenancy which is generally one year. The landlord should mention this clause in the agreement to make the agreement future-proof.

  • Damaged property

The landlord should clearly mention to the tenant that other than normal wear and tear, the tenant is responsible for all damages. The landlord should include a clause stating that the tenant must return the premises “broom-clean”. The landlord must state that the tenant is liable for legal fees if they take the tenant to court for damaged property. 

  • Tenant’s obligation clause

The landlord should explicitly mention the obligation on the part of the tenant. The obligation clause has to be comprehensive and inclusive of all provisions which can create future legal trouble.

  • Term of the tenancy

The landlord must state in every rental agreement whether it’s a rental agreement or a fixed-term lease. The decision will be based on how long you want the tenant to remain and how flexible you want your rental agreement to be.

  • Details of furnishing

The landlord must compile a list of the furnishings, including each set of fittings and features. This will come in handy if the tenant does any harm. You might then charge a penalty. Before renting out a property, landlords should examine the condition of the walls and roof to avoid any conflicts in the case of damage.

Legal checklist for tenants

1. Clauses of the rental agreement

Generally, the landlord prepares clauses of his/her convenience and give the tenants very little time to sign the document. Most of the tenants sign the agreement without understanding the clauses of the agreement. Here are a few clauses that a tenant must read before signing the rental agreement:

  • Maintenance clause

Annual and monthly maintenance clauses can be a major source of contention between the landlord and the tenant. As a result, before renting a flat, a renter should be well-informed about the requirements. Regular maintenance items like water taps, electrical boards, and wiring may not be at the top of your checklist, but major interior or exterior damage repair, as well as wall colour, might become contentious. So, a tenant must be aware of the requirements of the maintenance clause and negotiate the clause with the landlord if necessary.

  • Lock-in period clause

The lock-in period is a minimum stay duration for the tenants. The lock-in period varies in different agreements but typically, the lock-in period is of one year. The rental agreement clearly mentions the lock-in period clause. So for this reason the tenants must read this clause carefully and clear the doubt before signing the agreement.

  • Eviction clause

Landlords nowadays add stringent provisions under the eviction clause. The tenant needs to be aware of the notice period and grounds of such an eviction clause. It helps the tenant to raise their voice against unfair eviction. The landlord cannot evict a tenant without good reason or cause under the Rent Control Act. The eviction rules vary slightly from one state to the next. 

  • Security deposit clause

It is illegal to require a security deposit that is more than three times the monthly rent, according to the Draft Model Tenancy. The rate of the security deposit, like the amount of the rent, is governed by state regulations and the security deposit must be returned to tenants within one month of the premises being vacated.

  • Rental tenure

Make sure to check out the starting date and the ending date of the contract. Generally, the starting date would be the day when the tenant is being handed over the keys to the property.

  • Increment clause

The increment clause mentions the percentage increase in the monthly rent after a certain period. The topic of the percentage rise in the rental fee must be discussed at the time of signing the contract. And if you are from Delhi then Sections 6 and 8A of the Delhi Rent Control Act regulate the amount of rent that can be raised and the period after which a raise is justified.

2. Documents of the property

Before purchasing an apartment or flat through a broker or directly from the owner, the tenant should check the property is free of fraud or title issues. The tenant can ask for documentation such as the chain of title transfer, the most recent paid electricity and water bills. Tenants can also request proof of homeownership, such as a title deed or other documentation proving the owner’s right to rent the property.

3. Hidden cost

There is a maintenance expense that may or may not include the monthly water and energy rates, in addition to a lump-sum deposit and the monthly rental. These should be discussed with the landlord and spelt forth in the lease agreement.

There may be an additional charge for using the clubhouse amenities in some housing societies, which might add to the monthly bill. Some high-end communities charge extra for security measures such as CCTV, intercom systems, and other smart home amenities.

2. Signing authority

It is crucial to make sure that your rent agreement is signed by the signing authority itself and not any caretaker of the property. The legal owner of the property must only sign the contract irrespective of who has been inhabiting the property previously. This should be double-checked in the event of a sublet property. Tenants are frequently deceived in such situations.

4. Landlord’s access

The flat belongs to the renter for the agreed-upon tenure once the rent agreement is signed, and the landlord cannot enter the flat without the tenant’s consent, even if it is to carry out repairs.

Rental agreement template

Rent Agreement

THIS AGREEMENT made at _________ on this ___ day of _____, 20__ and effective from the same date, between _______________, son of ________________, aged ___ years, permanently residing at ________________________________________, hereinafter referred to as “THE LANDLORD”  (which expression shall, unless  it be repugnant to the  context  or  meaning thereof,  be  deemed  to mean and  include  his  legal  heirs, nominees, administrators,  legal representative,  successors and assignees) of the one part:

AND

___________, aged ___ years, residing at__________________________hereinafter referred  to  as “THE TENANT” (which expression shall, unless it be repugnant to  the  context  or meaning thereof, be deemed  to  mean  and include  his  legal  heirs, nominees, administrators,  legal representative,  successors and assignees) of the other part:

WHEREAS the TENANT having satisfied himself pertaining to facts stated above is desirous of obtaining on RENT the property situated at ____________________________________________________ (hereinafter referred to as “DEMISED PREMISES”), to which the LANDLORD has agreed and accepted. The  TENANT  has agreed  to  take  the  DEMISED PREMISES  on  rent, subject to  the  terms  and  conditions appearing hereinafter.

By this Rent Agreement, the tenant hereby covenants with the landlord as follows:

  • This Agreement shall commence from _____________ and will be for a period of 12 months only (renewable at 1 year). The TENANT shall use the DEMISED PREMISES for residential purposes only (including any incidental use that is permitted under law for the property that is rented for residential purposes). The TENANT shall not use the DEMISED PREMISES for any illegal or immoral purpose or use it so as to cause any nuisance or annoyance to the other owners/ occupants of the said property or neighbouring properties. The TENANT shall keep the LANDLORD indemnified in this regard. 
  • License fee and maintenance
      1. The Licensee shall pay to the Licensor Rs, ———– as a monthly License Fee for the use of the Licensed Premise, latest by —– day of every English calendar month. All such transactions shall be made through the mode of cash transfer.
      2. In case of delay in payment of monthly License fee, the Licensee shall pay the penalty which is equivalent to ————of monthly License Fee. Such penalty shall be exclusive of the monthly License Fee and shall be paid separately through the mode of cash transfer.
      3. In addition to the monthly License Fee, the Licensee shall have to bear electricity charges, water charges or any other maintenance charges of the Licensed Premise. Electricity and water charges shall be paid in accordance with the usage reflected on the respective meters.
  • Obligations
      1. Licensee’s obligations
        • The Licensee shall maintain the constructed portion of Licensed Premise in the same condition, as it was on the 1st (First) day of the period, throughout the period of the Agreement
        • The Licensee shall not carry out any addition or alteration to the structure of the Licensed Premise without the prior consent of the Licensor.
        • The Licensee shall ensure transfer of peaceful possession of the Licensed Premise to the Licensor on the expiration of the Period or termination of the Agreement. 
        • The Licensee shall comply with all rules and regulations of the Government or any governmental authority that may be applicable to the Licensed Premise during the Period of the Agreement.
        • The Licensee shall pay the License Fee regularly in accordance with the provisions mentioned in Clause 2.
        • The Licensee shall obey all rules and obligations of the Society.
        • The Licensee shall not use the Licensed Premise for commercial or any other purpose which is not mentioned in the Agreement.
        • The Licensee shall not engage in any activity which will have a detrimental impact on the licensor or the Licensed Premise.
        • The Licensee shall not indulge in any activity on the Licensed Premise which is or is likely to cause a nuisance to the other occupants of the said building.
      2. Licensor’s obligation
        • The Licensor shall ensure the peaceful enjoyment of the Licensed Premise to the Licensee.
        • The Licensor shall ensure that the Licensed Premise remains free from any security interests, other lien or any encumbrance which will interfere in exclusive enjoyment of the Licensed Premise by the Licensee.
        • The Licensor shall permit the Licensee to install or fix all such furniture which is not of a permanent nature in the Licensed Premise for the better use of the Licensed Premise, as the Licensee may think fit and entirely at the costs and expenses of the Licensee.
        • The Licensor shall return the Security Deposit on the termination or expiration of the Agreement. 
  • Security deposits
      1. The Licensee shall pay Rs. ——— to the Licensor, within ——-days of the execution of the agreement, as security deposit which shall be interest-free (hereinafter referred to as “Security Deposit”). 
      2. Security deposit would be refunded by the Licensor to the Licensee on the expiration of the Period or termination of the Agreement whichever is earlier.
      3. All such transactions mentioned in the above provisions of this clause shall take place through the mode of cash payment.
      4. The Licensor has the right to deduct the charges, on account of any damages (excluding normal wear and tear) to the Licensed Premises made by the Licensee or by anyone related to Licensee, from the Security deposits. 
      5. The Security Deposit shall be non-refunded in the event of non-payment of License Fee for more than ——— month or in case the Licensee does not vacate the Licensed Premise even after receiving the termination notice.
  • Termination
    1. If the Licensee commits a breach of any of the terms, covenants and conditions of the Agreement, the Licensor shall be entitled to terminate the license hereby granted by way of giving notice in writing of——- month.
    2. The Agreement shall terminate automatically without notice if the Licensee:
      • Defaults on payment of License fee for more than ——– months;
      • Suffers insolvency;
      • Convicted of an indictable criminal offence or any other criminal offence that may damage the reputation of the Licensor;
      • Remain persistent in breach of the obligations under the Agreement;
    3. The Parties can terminate the Agreement before the termination date by giving notice in writing of———- months to either party.

Conclusion

Different states in India have a different act that governs the relationship of the tenant and the landlord. Following are the links for different tenancy act for different states:

  1. The Maharashtra Rent Control Act, 1999.
  2. The Delhi Rent Act, 1995.
  3. The West Bengal Premises Tenancy Act, 1997.
  4. The Tamil Nadu Buildings (Lease and Rent Control) Act, 1960.
  5. The Karnataka Rent Control Act, 2001.

References

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