You all might have heard about the term rent agreement if you have ever rented a house. Those who have opted for making a rent agreement (which is a wise thing to do), might have noticed that 11 month rent agreement is preferred the most. But why is it so? Why rent agreements are mostly made for 11 months despite the fact that rent agreements can be renewed repeatedly? Also, there is an option to draft a rent agreement for as many years as you want in case of long-term tenancy.
What Is A Rent Agreement?
A rent agreement or lease agreement is a legal document that includes the terms and conditions related to the property including a description of the property (address, type and size), monthly rent, security deposit, the purpose for which property can be used (residential or commercial), and duration of the agreement.
Why Rent Agreements Are Mostly Made For 11 Months?
Though following the legal procedures will safeguard you from end number of future problems, we all have an instinct of choosing an easy path. Similarly, we do prefer to make rent agreements for 11 months because this eases the process for both parties. This legal document records the terms and conditions upon which the tenant and landlord have mutually agreed upon. So here are a few reasons that people choose to notarise the rent agreement instead of registering it.
1. To Avoid Tedious Legal Processes
We all are aware of the situations around legal processes in India. No one wants to get into legal formalities because of the higher possibility of protracted legal proceedings. Also, the legal experts also suggest creating a rent agreement for 11 months only and then renewing it after the statutory period. For people, the process seems quite complicated and time-consuming. The tenant and landlord avoid the hassle of being present before the Sub-Registrar.
2. Rent Agreement Registration Not Mandatory When Made For Less Than A Year
The most significant reason for people choosing to make a rent agreement for 11 months is that they don’t have to register it. As per Section 17(d) of the Registration Act, 1908, registration of a lease agreement for a period of less than a year is not a mandatory requirement and the same need not be registered.
“Such agreements will be admissible in a Court of law as an evidence in the event of a dispute even if it is notarized,” says Sadhawa Mishra, Partner, SNG & Partners.
3. Registration Cost And Stamp Duty
Landlord as well as the tenant prefers to go for the 11-month lease agreement to get rid of the stamp duty implication and registration charges. The amount for stamp duty will increase as the tenure of the lease agreement will increase.
Why You Should Have A Rent Agreement?
The document needs to be signed by the landlord as well as the tenant. The legal instrument aims at safeguarding the interest and rights of both parties i.e., landlord and tenant. In addition to that, the document can also be used as an evidence in court in case of any dispute between the landlord and tenant. It also ensures that both parties are aware of the grounds on which a rent agreement can be dissolved or terminated.
This article is written by Varsha. You can reach out to the author via email at bnbvarsha@gmail.com.
