Legal Validity of the Rental Agreement
Feb 05, 2020 Legal Guidance
According to the reports, around 12 million housing units lie vacant in the real estate market even though some many workers and students move to a different city for better education and lifestyle. The archaic law that rules over the rental realty market of the country came into existence after the First World War 1908.
Even though attempts have been made by the government to alter laws and therefore, the Model Tenancy Act, 2019 is in works. While the law is yet to become legal, we discuss the legal validity of the Rental Agreement vis-à-vis the provision of the existing legislation.
What is a rental agreement?
The rental agreement is a legal agreement that provides the tenancy for a short period of time, and the same can be renewed after the period is over. In India, the rental agreement between the landlord and the tenant is for 11 months.
Why is the rental agreement required?
The verbal agreement between the parties holds no legal validity. If either party breaks the agreement, then the other party cannot hold it against them. For example, if you are a tenant, then without the legal agreement, the landlord will be able to evict you without any prior notice. Or if you are a landlord, the tenant can deface and harm the property without having to face any consequences.
Rental agreement registration
Under Section 17 of the Registration Act, the agreement of the occupancy of the landlord’s premises for a year has to be registered at the sub- registrar’s office. The Rental agreement for less than 12 months is optional for registration with the sub-registrar.
11- month agreement
To avoid the hassle of registration by both parties, the rental agreement in India is crafted for 11- months. Even though there is no registration for the rental agreement, it still holds the legal validity, and it is admissible in the court in case of any dispute between the parties.
What if the lease period if over 12- months?
It is mandatory to register the lease agreement if it is over 12- months. An unregistered lease agreement is deemed null and void if it is not registered with the sub-registrar. It is the responsibility of the landlord to register the agreement, whereas it is the responsibility of the tenant to bear the monetary charges of the same.
Registration charges:
The tenant has to pay the stamp duty charges, and it varies from state to state. In UP, the registration charges of the rental agreement are 4 percent while in Maharashtra it is 0.25 percent.
What will happen if one of the parties passes away during the lease term?
In this case, it is the responsibility of both the parties involved to pass on the rights and responsibilities to their legal heir.
Can the landlord evict the tenant?
Unless there is a breach in the agreement, the landlord cannot evict the tenant.
What if the tenant refuses to leave?
In this case, the landlord can increase the monthly rental after the contract end, and if the tenant refuses to leave, then the landlord can move to the court. The court can favour the landlord if they find out that the tenant is degrading or spoiling the property or if the landlord requires to use the property for their personal use.
What if the landlord has given an eviction notice?
In this case, the tenant can do nothing, but if they think that the landlord if evicting them on baseless grounds, then they can seek police protection.
What does the Supreme Court have to say about it?
To avoid the litigations arising between the landlord and tenant, the Supreme Court passed an order that the landlord cannot eject the tenant for first five years if the tenant is paying the rent regularly and abiding by the agreement. However, if the landlord needs t use the property for their personal use, then they can ask the tenant to leave.
What is hindering the rental market growth?
The laws are laid out in favour of the landlord, and therefore more people are now interested in the co-living conditions. Since there’s no authority on the rental market like the RERA, the landlords do not find it lucrative enough to invest in another property and give it up for rent.
Even though attempts have been made by the government to alter laws and therefore, the Model Tenancy Act, 2019 is in works. While the law is yet to become legal, we discuss the legal validity of the Rental Agreement vis-à-vis the provision of the existing legislation.
What is a rental agreement?
The rental agreement is a legal agreement that provides the tenancy for a short period of time, and the same can be renewed after the period is over. In India, the rental agreement between the landlord and the tenant is for 11 months.
Why is the rental agreement required?
The verbal agreement between the parties holds no legal validity. If either party breaks the agreement, then the other party cannot hold it against them. For example, if you are a tenant, then without the legal agreement, the landlord will be able to evict you without any prior notice. Or if you are a landlord, the tenant can deface and harm the property without having to face any consequences.
Rental agreement registration
Under Section 17 of the Registration Act, the agreement of the occupancy of the landlord’s premises for a year has to be registered at the sub- registrar’s office. The Rental agreement for less than 12 months is optional for registration with the sub-registrar.
11- month agreement
To avoid the hassle of registration by both parties, the rental agreement in India is crafted for 11- months. Even though there is no registration for the rental agreement, it still holds the legal validity, and it is admissible in the court in case of any dispute between the parties.
What if the lease period if over 12- months?
It is mandatory to register the lease agreement if it is over 12- months. An unregistered lease agreement is deemed null and void if it is not registered with the sub-registrar. It is the responsibility of the landlord to register the agreement, whereas it is the responsibility of the tenant to bear the monetary charges of the same.
Registration charges:
The tenant has to pay the stamp duty charges, and it varies from state to state. In UP, the registration charges of the rental agreement are 4 percent while in Maharashtra it is 0.25 percent.
What will happen if one of the parties passes away during the lease term?
In this case, it is the responsibility of both the parties involved to pass on the rights and responsibilities to their legal heir.
Can the landlord evict the tenant?
Unless there is a breach in the agreement, the landlord cannot evict the tenant.
What if the tenant refuses to leave?
In this case, the landlord can increase the monthly rental after the contract end, and if the tenant refuses to leave, then the landlord can move to the court. The court can favour the landlord if they find out that the tenant is degrading or spoiling the property or if the landlord requires to use the property for their personal use.
What if the landlord has given an eviction notice?
In this case, the tenant can do nothing, but if they think that the landlord if evicting them on baseless grounds, then they can seek police protection.
What does the Supreme Court have to say about it?
To avoid the litigations arising between the landlord and tenant, the Supreme Court passed an order that the landlord cannot eject the tenant for first five years if the tenant is paying the rent regularly and abiding by the agreement. However, if the landlord needs t use the property for their personal use, then they can ask the tenant to leave.
What is hindering the rental market growth?
The laws are laid out in favour of the landlord, and therefore more people are now interested in the co-living conditions. Since there’s no authority on the rental market like the RERA, the landlords do not find it lucrative enough to invest in another property and give it up for rent.
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