Landlord's Corner: Did Your Tenant Claim Ownership Of Your Property?
Giving your property on rent? As a landlord, you would want to make sure that the tenant you choose is the best of the lot you interviewed. A majority of landlords prefer a tenant who is genuine and not unscrupulous willing to pay a higher rent. But, what if your estimations go wrong?
Take the case of south Delhi-based CA Sachin Jain. He rented his Greater Kailash II apartment and later planned to sell it. But, at the time when he planned to advertise the sale of his property, the real estate agent informed him that this property was already been sold to him by his tenant. Want to avoid a situation like this?
While the Rent Control Act was framed with an intention to be tenant-friendly, instances of property grabbing and other misuses ttakethe attention towards protecting the interests of the landlords, too. Although Rent Control Act does mention instances that call for an eviction, it can become time-taking owing to many reasons – absence of any one of the parties on the day of final judgement, unforeseen circumstances such as a death in the family, tenant's rigidness in shifting out etc.
MakaaniQ lists things that you should put in place before you choose a tenant for your property:
Rental agreement to your rescue
A sacrosanct piece of document, a lease should be duly signed by both the parties. It protects the interests of both. The best rental agreement is the one where the ownership is stated, the period of contract is established, terms and conditions of use of the house, provisions and amenities already provided by the landlord are mentioned, the security deposit and reimbursement or forfeiture clauses are made clear. To know more about rental agreement, read here and here.
The most preferred way of agreements is the Leave and License agreement because of the following reasons:
- Unlike a Lease agreement, no transfer of interest is possible in the case of a Leave and License agreement.
- While Lease agreement is transferable and heritable, Leave and License agreement cannot be inherited, transferred or sub-created in favour of any third party.
- Leave and License agreement also entails its dissolution in case the owner wants it and is discontinued if the lessee has died but in the case of a lease agreement, death does not terminate the lease.
- Unlike a lease agreement, the License agreement does not give the power to alter or construct unless specified.
- A tenant's interest is protected even if the property has been sold during the contract period in the case of a lease agreement but in case of the Leave and License agreement, the contract has to be renewed even if the property is sold.
Therefore, if you are a landlord unsure about what the future holds, the key is to arm yourself with the right agreement.
Get the lease agreement registered
To make sure that you can use the lease agreement as a weapon in your defence, in case of a default on the lessee's part, you must register it. Only once it is registered is when it is eligible to be used as an evidence in a court of litigation. The registration comes with a cost that includes the stamp duty and the registration fee. Under Section 17 of the Registration Act 1908, it is mandatory to register the agreement if the lease period exceeds 11 months.
On Indian Real Estate Forum, Varun Verma writes, “I have a tenant who is not vacating even after we told him to do that eight months back. We had given him a rental agreement to sign which he said he had lost and we forgot to get a new one done. The tenant pays the rent late and has not paid electricity bills for past few months in event of which the electricity board had cut the electricity and he then forged and did some wrong connections which we forced him to remove. My marriage is in two months and we need the house for relatives and later for personal use. What should be done to get things moving soon?” At such times, a court case is inevitable but you could avoid the hassle by getting a registered rental agreement done at the earliest.
Get the police to verify
Police verification is necessary even if you have well-interviewed the tenant and he fits your criteria of a good one. According to Section 188 of the Indian Penal Code, it is a punishable offence to not have a police verification of your tenant. Police verification demands that you submit your tenant's basic information and the background check is conducted by the police. It helps you in case the tenant is a known offender.