8 Essentials In A Good Rent Agreement
Ravi Sharma, a 35-year-old marketing executive who recently shifted to Pune on transfer, decided to take a house on rent for two years in the city. He agreed to pay a monthly rent of Rs 30,000, but the landlord increased the rent by Rs 1,000 after six months due to a general increase in rentals. Now, Sharma will have to pay the increased rental value because the rental agreement didn't fix Rs 30,000 as the monthly rent even if there was a fluctuation. Things would have been different if Sharma had read the agreement carefully and made alterations that would have protected his interests.
This shows how important it is to understand the key elements that make a good rental contract for those planning to take property on rent in India. You should study a good model rent agreement format in Delhi or any other city where you plan to take a house on rent before executing a rent agreement.
MakaanIQ lists the key elements that make a good rental agreement.
Duly stamped & registered
It is essential that the rental agreement be registered. It will help protect your right as a tenant. To register, you will have to pay stamp duty and registration fee. Stamp duty varies from state to state and is also dependent on the tenure of the rental agreement.
Essential details
It should have the legal names of both the parties -- the landlord and the tenant -- and the start and end date of the agreement.
Rent-related information
The rent paid per month and the date on which it should be honoured should be mentioned in the agreement. This should illustrate the mode of payment and a penalty clause in case of late payment. Check for any rent-escalation clause which might lead to an increase in rent on the basis of market movement.
Payment of utility charges
Make sure that your rent agreement specifies whether the amount of rent includes bills like electricity, water and gas. Does this amount include miscellaneous charges like club membership fee (if any), society maintenance charges (if any), garbage collection, maintenance charges (if any), and parking charges (if any).
Security deposit
It is essential that a good rental agreement clearly indicate the amount of security deposit and that it will be refunded at the end of the agreement. It is important to know that every rent agreement has a damage clause. In case of damages, the landlord can deduct the amount from your deposit, which could go as high as 12 months' rent.
Conditions that can lead to eviction
See the conditions mentioned in the agreement under which the landlord can ask you to vacate the house. This usually comprises situations like 'material breach' of the agreement. This includes disturbing neighbours, causing damage to the building, failure in making payments, among other things. This section needs to be ascertained so that you know that you are not defaulting.
Notice period
It is essential for your agreement to specify the notice period and penalty clause, if any, in a situation of eviction due to default. In case of lower rental properties, the notice period is usually 30 days. For high rental ones, this period could go up to 60 days.
Property's condition at the time of renting
As a practice, always check the condition of the property before renting. It is great to include a clause that states the condition of the property in detail at the time of renting. It should give room-by-room description.
In the end, a rental agreement should be duly signed by both tenant and landlord, and mention the date. This should be done in the presence of two witnesses.