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How to make a rental agreement?

How to make a rental agreement?

What is the need for a rental agreement?

A rent agreement is essential to establish the contractual relationship between the landlord and the tenant. All the terms and conditions relating to the renting of the property is written in the agreement so as to avoid any future disputes. The agreement serves as an important piece of evidence establishing the ownership of the landlord as well as protects the tenant from unlawful eviction and financial demands.

 What are the essential clauses of a rental agreement?

Generally, a rental agreement should contain the following clauses -

  • Full name of both the parties is to be mentioned in the agreement. This gives clarity to the ownership of the property. It also helps the landlord track the number of people staying in the property.
  • The term of the agreement should be mentioned to ensure that the landlord cannot evict the tenant before the expiry of the term and the tenant cannot overstay on the property after the contract has ended.
  • The payment instructions for the rent to be paid, when to be paid, where to be paid, penalty clause for any late payment, etc. must be clearly mentioned in the rental agreement. The agreement should also mention the rate of annual escalation of rent during the tenancy period.
  • The maintenance charges to be paid by the party to the society should be mentioned. In addition, to this, all extra charges such as major and minor repairs must also be mentioned in the agreement.
  • The agreement should elaborate on the activities which are/ are not allowed on the property. For instance, it should be clearly mentioned whether subletting is allowed or not or if alterations can be done to the property.
  • The amount of security deposit should be clearly mentioned in the agreement. It should also be mentioned that the security deposit must be fully refunded at the end of the rental agreement. A security deposit is usually 12 months of rent.
  • The agreement should contain the notice period which the tenant is required to give to the landlord before vacating the property. This will ensure that the landlord has enough time to look for the next tenant.
  • The number of fixtures contained in the house should be clearly mentioned in the agreement. It will also be prudent to mention the condition of the fixtures in the property.

 Are there any guidelines given by the court for avoiding litigation between the landlord and tenant?

In the case of Mohammad Ahmad & Anr vs Atma Ram Chauhan & Ors, in the year 2011, the Supreme Court laid down certain guidelines and norms to minimise litigation between landlord and tenant at all levels. These are as follows -

  • The tenant must enhance the rent according to the terms of the agreement at least by 10 percent after every three years. If the rent is too low, having been fixed almost 20 to 25 years back, then the present market rate should be worked out either on the basis of valuation report or reliable estimates of building rentals in the surrounding areas, let out on rent recently.
  • Apart from the rental, property tax, water tax, maintenance charges, electricity charges for the actual consumption of the tenanted premises and for a common area shall be payable by the tenant only so that the landlord gets the actual rent out of which nothing would be deductible.
  • The usual maintenance of the premises, except major repairs, would be carried out by the tenant only and the same would not be reimbursable by the landlord.
  • If any major repairs are required to be carried out then in that case only after obtaining permission from the landlord in writing, the same shall be carried out and modalities with regard to adjustment of the amount spent thereon, would have to be worked out between the parties.
  • If present and prevalent market rent assessed and fixed between the parties is paid by the tenant, the landlord shall not be entitled to bring an action for his eviction against such a tenant at least for a period of 5 years.
  • The parties shall be at liberty to get the rental fixed by the official value or by any other agency, having expertise in the matter.
  • The rent so fixed should be just, proper and adequate, keeping in mind, location, type of construction, accessibility with the main road, parking space facilities available therein etc. Care ought to be taken that it does not end up being a bonanza for the landlord.

 What are the remedies against unlawful eviction for the tenant?

Every State has a Rent Control Act, containing specific grounds under which a landlord can evict a tenant. Eviction of a tenant on any ground other than the ones mentioned in the State Acts is not considered to be sufficient for eviction. Additionally, the law also gives the tenant the right to protection in a case where the landlord forcefully evicts the tenant for a reason not specified in the Act. In the event that the landlord tries to forcibly evict the tenant, the tenant has a right to file a case in the civil court and seek an injunction. The order of injunction will stop the landlord from forcibly evicting the tenant. 

What are the common grounds for eviction of a tenant?

Following are the common reasons for eviction of a tenant -

  • Wilful default of payment of rent for continuous period of time
  • Subletting the property without the consent of the owner
  • Using the premises for some other purpose than mentioned in the rent agreement
  • The landlord requires the premise of his own occupation
  • The genuine need of the property for performing certain repairs that cannot be performed unless the premises are cleared.
  • The premises are to be demolished for construction of another building.

 

These guides are not legal advice, nor a substitute for a lawyer. These articles are provided as general guides and effort are made that these guides are helpful to the readers. We do not guarantee that they are accurate or appropriate for your situation, neither do we undertake any responsibility for any loss that might be caused. We recommend not to rely entirely on this information without seeking legal advice.
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