Guidelines for NRI Landlords and their Tenants
Jun 02, 2017 Legal Guidance
It is a common practice among NRI (Non-Resident Indian) home owners to rent out their property in India. It gives them a return on investment and also ensures that the property is maintained. However, this process of renting can be tricky for the landlord as well as the tenant. In many cases, the landlord appoints one of his/her relatives in India to look after the property, rent it out and collect the rent. The tenant might wonder if it is okay to pay the rent to someone who is not the actual owner and what might be the legal implications thereof.
It should be noted that this is legal only if the said relative has a Power of Attorney (POA) that clearly mentions his/her right to rent out the property on behalf of the owner and also to collect the rent. He/she can carry out the functions legally sanctioned in the POA only. For instance, if one has the right to lease they can only lease and sell the property.
The owner needs to make a special POA in the name of the representative for the purpose of leasing. It should specify that the right of the representative is restricted only to leasing. This makes the POA different from a General Power of Attorney (GPOA).The role of the representative should be clearly mentioned while framing the POA. Details like the initial deposit to be collected, rental amount and any other liquid assets should be documented. All the aspects of the transaction should also be documented.
Taking care of these points ensures that the home owner and the representative, both, have clearly mentioned their interests and their rights and responsibilities are legal. For an NRI this is extremely important as it assures them that they can resort to legal measures in case of any dispute. The parties involved can choose to approach the state safety and welfare offices or consult a lawyer.
For tenants who are renting out a property owned by and NRI, some points must be kept in mind before finalising the lease agreement. The tenant must check the POA carefully and know the rights of the representative. It should also be made sure from the POA whether the representative can lease out the entire property or only certain part of it.
The identity of the representative should also be tallied with that mentioned in the POA. It should also be clear whether the rent and security deposit is to be paid in part or whole. The POA would also mention whether the representative is authorised to take decisions regarding repair and maintenance of the property.
The tenant should make sure that the representative has fulfilled his duties at the Sub-Registrar’s Office on payment of stamp duty, registration charges, etc. In addition to this, it helps if the tenant keeps in touch with the actual owner over phone or email to ensure clear communication and eliminate doubts.
It should be noted that the legal representative with a GPOA does not, in any case, have the right to sell the property. The Supreme Court has ruled that the transfer made through a GPOA will not give the title of the property to the buyer. A property can be bought only from the actual owner.
It should be noted that this is legal only if the said relative has a Power of Attorney (POA) that clearly mentions his/her right to rent out the property on behalf of the owner and also to collect the rent. He/she can carry out the functions legally sanctioned in the POA only. For instance, if one has the right to lease they can only lease and sell the property.
The owner needs to make a special POA in the name of the representative for the purpose of leasing. It should specify that the right of the representative is restricted only to leasing. This makes the POA different from a General Power of Attorney (GPOA).The role of the representative should be clearly mentioned while framing the POA. Details like the initial deposit to be collected, rental amount and any other liquid assets should be documented. All the aspects of the transaction should also be documented.
Taking care of these points ensures that the home owner and the representative, both, have clearly mentioned their interests and their rights and responsibilities are legal. For an NRI this is extremely important as it assures them that they can resort to legal measures in case of any dispute. The parties involved can choose to approach the state safety and welfare offices or consult a lawyer.
For tenants who are renting out a property owned by and NRI, some points must be kept in mind before finalising the lease agreement. The tenant must check the POA carefully and know the rights of the representative. It should also be made sure from the POA whether the representative can lease out the entire property or only certain part of it.
The identity of the representative should also be tallied with that mentioned in the POA. It should also be clear whether the rent and security deposit is to be paid in part or whole. The POA would also mention whether the representative is authorised to take decisions regarding repair and maintenance of the property.
The tenant should make sure that the representative has fulfilled his duties at the Sub-Registrar’s Office on payment of stamp duty, registration charges, etc. In addition to this, it helps if the tenant keeps in touch with the actual owner over phone or email to ensure clear communication and eliminate doubts.
It should be noted that the legal representative with a GPOA does not, in any case, have the right to sell the property. The Supreme Court has ruled that the transfer made through a GPOA will not give the title of the property to the buyer. A property can be bought only from the actual owner.
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