Before moving towards rent agreement we must first make us clear about the two words which form the word “Rent Agreement” i.e. rent and agreement.
What is rent?
A tenant’s regular payment to landlord for use of property, land or any product.
What is agreement?
A negotiation and typically binding arrangement between parties as to a course of action.
Now we are at a stage to understand what does Rent Agreement actually means and in this article we are going to see what are the legal aspects of rent agreement, what are the necessities, what are the advantages of it and what does it contain.
What is rent agreement?
A rental agreement is a contract of rental, usually written, between the owner of a property and a renter who desires to have temporary possession of the property; it is distinguished from a lease, which is more typically for a fixed term. As a minimum, the agreement identifies the parties, the property, the term of the rental, and the amount of rent for the term. The owner of the property may be referred to as the lessor and the renter as the lessee.
Legal aspects of Rent Agreement:
There is a separate act governing rent agreement for every state such as for instance, Rent Control Act (1999) Maharashtra, Rent Control Act (1958) Delhi, Tamil Nadu Buildings (Lease and Rent Control) Act (1960) Chennai govern the state’s rent agreements.
Advantages of Rent Agreement?
Facilitates other registration’s:
It can be used as a valid evidence of address proof for various registration such as GST registration, Import Export Code registration, Companies registration, etc.
Written Proof:
Rent agreements would be a formal and legal relationship between the parties. Always these forms of agreements would be in writing. Hence it would be a document for reference in the future for either of the parties.
Legal Compliance:
By entering into an agreement, compliance can be maintained by the parties. As the agreement is in writing the provisions related to law would be applicable to both the landlord and the tenant.
Content of Rent Agreement?
- Rental property address and details – This is especially important when you have one building with multiple units so there’s no confusion.
- Details on any furnishings, parking space, storage areas, or other extras that come with the rental property – Will the unit be furnished or unfurnished? Will a refrigerator be included? Etc. You can see how disagreements here could lead to problems.
- Names of all tenants – Every adult who lives in the rental unit, including both members of a married or unmarried couple, should be named as tenants and sign the lease or rental agreement. This makes each tenant legally responsible for all terms, including the full amount of the rent and the proper use of the property.
- Limits on occupancy – Your agreement should clearly specify that the rental unit is the residence of only the tenants who have signed the lease and their minor children. This guarantees your right to determine who lives in your property — ideally, people whom you have screened and approved — and to limit the number of occupants. The value of this clause is that it gives you grounds to evict a tenant who moves in a friend or relative, or sublets the unit, without your permission.
- Term of the tenancy – Every rental document should state whether it is a rental agreement or a fixed-term lease. Rental agreements usually run from month-to-month and self-renew unless terminated by the landlord or tenant. Leases, on the other hand, typically last a year. Your choice will depend on how long you want the tenant to stay and how much flexibility you want in your arrangement.
- Deposits and fees – Expect to see details on the dollar amount of a security deposit, cleaning deposit, or last month’s rent BEFORE the tenant can move in. Are deposits refundable or nonrefundable?
- Rent – Your lease or rental agreement should specify the amount of rent, when it is due (typically, the first of the month), and how it’s to be paid, such as by mail to your office. To avoid confusion and head off disputes with tenants, spell out details such as:acceptable payment methods (such as personal check only) whether late fees will be due if rent is not paid on time, the amount of the fee, and whether there’s any grace period, and any charges if a rent check bounces.
- Repairs and maintenance – Your best defense against rent-withholding hassles and other problems (especially over security deposits) is to clearly set out your and the tenant’s responsibilities for repair and maintenance in your lease or rental agreement.
The Bottom Line:
To be on a safer side, it will always be advisable to get rent agreement registered whether it is a contract for more than 11 months or less.
Written By – Darshan Banthia
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