A year-long lease property must be registered in accordance with the Registration Act of 1908’s criteria. Therefore, the rent agreements are typically written for a term of 11 months in order to avoid the laborious registration process.
The rent agreement, also known as a lease agreement, is a written contract between the landlord, who owns the property, and the tenant, who is renting it out. The lease agreement details the terms and conditions under which the property is leased, including the property’s description (location, kind, and size), monthly rent, security deposit, permitted uses (residential or commercial), and length of the lease. Although its terms and conditions are negotiable, once it is signed, it binds both the landlord and the renter. It also outlines the circumstances in which the agreement may be cancelled.
The importance of a rental agreement
As previously said, a rent agreement details all of the terms and conditions upon which a property is leased. The description of the property, the agreed-upon monthly rent, the security deposit, the permitted uses for the property, the proposed term of the agreement, the notice period, the conditions under which the said agreement may be terminated, along with other crucial inclusions, if any, are all included in this.
The rent agreement, which was initially created to protect the parties’ interests, may also be cited as proof in the event that a dispute arises regarding the property.
“A rent agreement is essentially a written record of the parameters that the owner and the renter mutually agreed upon to prevent future disagreements.” Many gated communities now make it a condition for tenants to take advantage of all the amenities offered by the community, according to Mr. Sandeep Tibrewal, a property dealer headquartered in Noida.
Why only 11 months?
A year-long lease property must be registered in accordance with the Registration Act of 1908’s criteria. Therefore, the rent agreements are typically written for a duration of eleven months in order to avoid the laborious registration process. If it goes beyond that, as was said before, it must be mandatory to register under the Act, and this would have a lot of negative effects.
Stamp duty and registration fees must be paid in the event that an agreement is registered. The landlord and the tenant may mutually decide not to have the lease registered in order to avoid paying such high fees. Furthermore, an 11-month lease gives the landlord more leeway because the rent can be determined by the status of the market and is frequently renewable.
The arrangement need not, however, last for a full 11 months. With the parties’ consent, agreements that are renewable or extendable for another three to five years may also be created.
Is an 11-month rent agreement valid in court?
Yes, an 11-month lease agreement may be used as evidence in court. These lease agreements are written on 100-rupee stamp paper and require notarization.
A lease agreement must be signed if the rental term is longer than 12 months, as per the Registration Act of 1908 of the Indian Penal Court.
- However, there are significant stamp duty and registration fees associated with the signing and recording of such an agreement. House owners and tenants typically decide not to have the agreement “registered,” Therefore, the majority of the rent agreements are signed for 11 months in order to avoid having to pay the aforementioned charges and to save time and effort.
- Another reason a rent agreement is limited to 11 months is so the landlord has the option to raise the rate in the 12th month or end the lease early without having to lock the tenant into the property for an extended period of time.
11-month rent agreement format
The following two images each show the format of an 11-month rental agreement:
Before understanding the rules for an 11-month rental agreement, let us have a look at the common terms used in rental agreement parlance.
- Duration: The length of time the lease will be in effect
- Rent: Rent is the sum of money paid by a tenant to a landlord in exchange for the use of a rented property.
- Deposits: The amount of any necessary deposits, each deposit’s type, and the conditions regulating each deposit’s return or change following the rental period
- Terms of usage: The asset’s intended use as well as the rules and guidelines that apply to its use
- Utilities: Which ones the tenant is responsible for paying and which ones are included in the rent
- Insurance: Business rental agreements are most commonly used to specify whether or not the tenant is responsible for property insurance.
- Repairs and maintenance: Keeping the property in good repair is the responsibility of the landlord or the tenant.
Rules for an 11-month rental agreement
The guidelines in this regard are as follows:
Rent, maintenance charges, and security deposit:
- To prevent both parties from breaking their word, these values must be expressly stated in the contract.
Pets:
- The presence of animals on the property must be discussed and agreed upon beforehand.
Penalty for late payments:
- Late rent payments may incur a fee at the landlord’s discretion. The deed must explicitly explain what happens if payments are made late.
Cleaning and painting:
- Before the tenant moves in, the landlord may clean and repaint the house. If so, the tenant will be responsible for those costs. Therefore, it must be made explicit in the deed that the security deposit will be deducted for painting and cleaning costs.
Consequences of overstay:
- The landlord may decide on a penalty if the tenant keeps using the property after the lease has ended. The act should specify such a punishment.
Food habits:
- The landlord must outline his guidelines for acceptable eating behaviours on his property.
11-month rental agreement cost
In this regard, each state has its own stamp duty and registration fees. In Delhi, for example, the stamp duty fee for a house rented out for up to five years is 2%.
Stamp duty on an 11-month rental agreement
If the lease is for a shorter period of time than a year, neither the landlord nor the renter is needed to register the rental agreement. Therefore, stamp duty is not due on these leasing agreements. It is required to stamp rental agreements that are longer than a year and pay the associated fees. These stamp duty fees differ by state.
| Area | Agreement time period | Amount |
| Delhi | Up to 5 years | 2 percent |
| Noida | Up to 11 months | 2 percent |
| Karnataka | Up to 11 months | 1 percent of the total rent plus deposit paid annually or Rs. 500, whichever is lower |
| Tamil Nadu | Up to 11 months | 1 percent of rent + deposit amount |
| Uttar Pradesh | Less than a year | 4 percent of annual rent + deposit |
| Maharashtra | Up to 60 months | 0.25 percent of the total rent |
| Gurgaon | Up to 5 years | 1.5 percent of the average annual rent |
| Gurgaon | 5–10 years | 3 percent of the average annual rent |
Who pays for the rental agreement registration charges?
Who should foot the bill for the rental agreement is not stated in the legislation. Tenants and property owners, however, ought to split the cost of registration according to a mutual understanding. Tenants are frequently responsible for paying the full cost of the rental agreement as well as the registration fees.
Why should you register a rental agreement?
For a landlord-tenant association without disputes, a recorded rental agreement is essential. While simultaneously defending their legal rights, it strengthens the relationship between the two parties. Additionally, it discloses who owns the property to others. Since an oral agreement is not legally binding, a property owner should never consent to it and should always insist on the execution of a written agreement.
When a deal involves a substantial asset, such as a residential house, the landlord requires a document that legally safeguards him or her in the event of a disagreement or future objection from the other party.
When should I register a rental agreement?
The Registration Act of 1908 defines “lease” as an arrangement involving real estate, including residential and commercial properties, including leases for farming, hereditary allowances, fisheries, ferries, rights to ways and lights, and any other advantage derived from the land (excluding timber or crop cultivation). All of these properties must be registered if any of them are rented to a tenant for a period exceeding 11 months. A lease that is made for 11 months or less is exempt from registration.
Even if it is not required, it is nonetheless wise and proactive to record rent agreements that are shorter than a year. You can also pay the stamp duty and notarize the document with a notary public. In several instances involving the legitimacy of 11-month rent agreements that were examined by high courts and the Supreme Court of India, the 11-month agreements were determined to be inadmissible in court. Therefore, the potential future issues that could arise at any time do not outweigh the savings on stamp duty and registration required to record a rent agreement.
How to register the rental agreement?
Describe a lease with key provisions for the security deposit, rent, and upkeep. Both the landlord and the renter must be present in person at the sub-office registrar’s for registration, as well as two witnesses. He or she must sign the Power of Attorney, giving the attorney the authority to bring the agreement to a close, even if both parties are not present at the same time. They must have their current ID cards on them at all times for validation. Additionally, using an agent to register the rental agreement is not allowed.
Note: It’s critical to record the exact moment the deed was created. At least four months must pass before the expiration date of the deed before registration can be completed.
What paperwork is needed to register a rental agreement?
- The original document establishing the property’s ownership or title
- Property records, such as Index II or the tax receipt for the rental property
- Two photographs of each of the parties and one of each of the witnesses
- A copy of the witness’s and party’s addresses as proof of residency. Any of the following documents can be used as address proof: a passport, an Aadhaar card, a ration card, a bank passbook, or a driver’s license.
- Route map of the property leased out
Is it possible to register a rental agreement online?
Yes, a rental agreement can be registered online. The front page should either be stamped with an electronic stamp or printed on stamp paper. Platforms that produce online lease agreements offer these services in accordance with each state’s or the Union Territory’s (UT) requirements.
The parties (landlord and renter) must be physically present at the Sub-Registrar of Assurances office to complete the process, even though they can schedule an appointment for the registration online.
Is it legal to sign a rental agreement online?
If the following criteria are met, then a rental agreement signed online is legitimate and lawful.
- Both the tenant and the landlord agreed to the agreement’s draft before it was finalized.
- It has been printed and signed, or it has been digitally signed by both parties.
- It has an e-stamp at the start or is printed on stamp paper with the necessary value.
While an online lease is valid, it must be registered with relevant Sub-Registrar of Assurances office in order to be backed by law. For instance, even if a rent agreement is unregistered and its duration is less than 11 months, the court may not accept it as evidence in the event of a disagreement. As a result, it will make the resolution of disputes far more difficult and time-consuming.
Is a rental agreement that is not registered valid?
Any rental agreement that isn’t registered is only valid for a period of time longer than 11 months. It is crucial to register your rental agreement if it will last longer than 11 months and you want it to be legally binding. If your rental agreement is not registered, it could be difficult for you as the landlord to get the renter to pay back any unpaid rent.
Consequently, having a documented rental agreement is crucial when renting out a property. It would go a long way toward safeguarding both parties’ interests and preventing monetary inconsistencies.
Renewal of an 11-month rental agreement
The rental arrangement can easily be extended. Just a few changes need to be made to the current terms and conditions.
The list of a few amendments that should be included in an agreement renewal or extension is as follows:
- Change the title of an agreement to include “renewal” or “extension.”
- The agreement’s execution date is updated to the present day.
- The ages of the renter and landlord could differ by a year. (This is applicable only if age details are mentioned in the agreement.)
- Modifications to the start and end dates of a renewal agreement. Renewal agreements often begin the day after the existing agreement expires.
- Rent could rise by about 5%.
- The security deposit stays the same.
- If an apartment society raises or lowers maintenance fees, it may have an impact on the monthly upkeep of a property.
- The cost of water, electricity, gas, and parking may be a factor.
- If the lock-in term was included in the first agreement, think about deleting it.
- The notice period is unchanged. However, with the consent of both the landlord and the tenant, we may modify the notice period.
- If there are any changes at the time of agreement renewal, the specifics of the fixtures, fittings, and furniture may vary.
The renewal agreement is executed using the same process as your initial agreement. The steps to sign a rental or renewal agreement are listed below:
- Draft the article in Word format.
- Purchase Rs. 100 worth of e-stamp paper at the registered office, court, or nearby cooperative bank.
- Make the draft into an electronic stamp.
- Arrive at a nearby notary public with your supporting documentation. The contract must be signed by the renter, the landlord, and witnesses.
- The agreement is witnessed and signed by a notary public.
The renewal agreement’s execution process is now complete.
To prevent misunderstandings, be certain that every clause in your rental agreement is spelt out in detail. Providing verbal agreements with supporting documentation is always a good idea, no matter how minor it may seem at first. Remember that in the event of a dispute, you would have these papers to rely on for protection.
If required, obtain legal counsel prior to signing a rental agreement. The majority of the strict rent control restrictions, which must be followed under long-term contracts, are to the renters’ advantage. The current rental control laws protect tenants from arbitrary or unfair evictions and prevent landlords from overcharging tenants.
