Residential lease deed – A Home to Live In…

Introduction

In the era of modernization, where the life of city, with availability of easy facilities and opportunities, seems to attract the youngsters of the society. The reason for attractions is to accomplish dream and to be independent. Many people leave their house and shift to another city just to earn a livelihood. For which they need to stay in Hostels, PG’s or rented house. Generally, one prefers to have a rented house so that he lives independently. Mutual understanding needs to be created between the Lessor and Lessee. Some clauses needs to be agreed upon by the both the Parties at the initial stage to avoid future disputes. Therefore, the possession of rented house, if acquired, by means of lease deed or rent agreement with defined terms and conditions will make life easy. Before coming to the important clauses of the residential lease agreement, let us first understand what it means. The word lease deed consists of 2 words: lease and deed.

Lease: As per Section 105 of Transfer of Property Act, 1882, “Lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.”

Therefore, Lease transaction involves three important terms:

• The transferor is called the Lessor or Owner,
• The transferee is called the Lessee or Tenant;
• The price is called the premium, and the money, share, service or other thing to be so rendered is called the Rent.

Deed: A deed (anciently “an evidence”) is any legal instrument in writing which passes, affirms or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed. It is commonly associated with transferring (conveyancing) title to a property.

Therefore, Residential Lease deed is a legal instrument through which right of residence in property is transferred from Lessor to Lessee for a specified time and on mutual terms and conditions.

One should know the important clauses which need to be inserted in the residential lease deed. The clauses to be covered in the residential lease deed are:

1. Date and place of execution: The deed of the lease should mention the date and place of execution. Date is utmost important to check the validity under the Limitation Act. Any legal action can be initiated only if the legal action undertaken against the act is not time-barred. Further, if place is mentioned, it becomes easy to identify place where stamp duty in case of registration is to be paid.
2. Details of Parties: Details of each party such as name, father’s name, age and address is to be mentioned in the residential lease agreement for easy identification of the Parties involved. If more than 1 adult member is involved, then it is better to specify details of all the adult members, so as to involve and bound them directly with the terms of rental agreement.
3. Details of Property:  The Lease Deed must clearly mention the details of the property to be leased out. The details such assize of the premises, location where it is situated and its surrounding area etc. to be stated specifically for easy identification of the premises to be leased out.
4. Term and Lock in period: The Lease Deed Agreement must also specify the term or duration for which it has been entered upon. Sometimes, Lock in clause needs to be inserted in the Lease deed so as to protect the monetary interest of the Party. In case, the Lessee leaves the premises before lock in period, he needs to pay the rent for the unexpired period. Similarly, if at the request of Lessor, lessee vacates the premises, Lessee shall be entitled to reimbursement of rent for the unexpired period. Further, in case of term of rental agreement is more than 12 months then the rent agreement registration is mandatory.
5. Consideration: The amount of consideration involved should, in the house rental agreement, be stated clearly in the deed. Further following clauses relating to consideration  may be mentioned:
   • the time of payment is monthly/quarterly/yearly
   • amount is paid in advance or at the end of the month
   • any other charges included in consideration or not.
6. Security Deposit:  The amount of security deposit, if any, should also be specifically mentioned in the house lease agreement. Also details such as the security deposit amount is interest free or not is to stated clearly. Further, the terms of repayment/ adjustment of security deposit at the time of termination/immediate cancellation of the deed should also be stated.
7. Use of premises: The house rental contract should mention that the purpose of letting out the premises is for residential use only. Tenant shall be held responsible if the same is used for any purpose other than for residential use.
8. Subletting: The lease deed should clearly mention whether the subletting right is available with the tenant or not. This clause protects the interest of the Lessor and without his permission Lessee cannot sub let the premises.
9. Electricity, water bill, Maintenance expenses: The rental agreement should specify the terms of payment of utility bill and maintenance bills i.e. whether this bills to be paid in addition to rent or not. In case the amount is charged separately, then lessor should ensure that all bills due/ in dispute prior to the date of execution of the deed are duly paid/settled. After the execution of deed, it is the duty of the Lessee to make time to time payment.
10. Repairs and structural changes: The residential lease deed should also state that who shall bear the expenses for repairs and structural changes. In case of day to day repairs in the property, then the same shall be borne by the Lessee. However, major structural changes in the property shall be carried only after the approval of the Lessor and the lessor shall bear the expense or as mutually agreed upon by the Parties.
11. Rights and duties of Lessor and Lessee: The Lease Deed should clearly specify the rights and duties of both Lessor and Lessee. For example: Lessor shall be entitled to enter into property during day time. Lessee shall be entitled to use the property without unnecessary interference by the Lessor. The property should be free from encumbrances. The property should be kept neat and clean.
12. Fully / Semi furnished Premises: In case the property is fully/semi furnished, it should mention that the fittings, fixtures, and amenities attached with the premises are in working condition. In case the same becomes unusable, then it is the responsibility of  Lessor to repair/replace the same. Any damage caused due to negligence  of the lessee to fittings, fixture and amenities shall be borne by him. Lessee shall handover the property in the same condition as was handed over to him by the Lessorat the time of execution.
13. Notice: Both parties should mention their address where notice or any communication may be sent through post or through mail. The address should be clearly mentioned so that the documents can be delivered with any delay/confusion.
14. Termination clause: The residential lease agreement should mention the time for serving notice period and the causes for termination of deed. Further, causes resulting in immediate termination of the deed should be clearly mentioned.
15. Renewal Clause: A renewal clause in the deed provides an option to carry on the lease for further period. Therefore, if both parties mutually agrees to carry on for further period on the same terms and condition, they can renew the deed. However, clause for  increment of rent pursuant to renewal should be specifically stated.
16. Grounds of immediate eviction: The deed should also mention the grounds under which the deed stands terminated immediately. For example, misbehaviour by the Lessor/Lessee would result in automatic termination of deed and immediate eviction of the Premises.
17. Timing: In case the premises are situated in a locality, timing for entry during night shall be stated specifically. This clause implies that nobody should be disturbed by the act of the Tenants.
18. Veg-Non-Veg Food: Many a times, Lessor prefers to lease out the premises to a person who is purely vegetarian. To avoid dispute, the Lessor should clearly specify, whether or not non veg food is allowed to be brought /cooked in the premises.
19. Number of Member: The Lessor should also clearly mention the maximum number of members allowed to live in the Premises. Also the deed should state the consequences, in case the number exceeds the limit stated.
20. Pet allowed: Sometimes, the owner is reluctant to allow pets in the premises so leased out. Therefore, the deed should state specifically whether or not pets are allowed to be kept at the Leased out property.If there is an additional deposit required for a pet, that amount should be included in the lease agreement.
21. Parking: Many a time parking facility is also attached with the leased out premises. In case parking facility is available with premises, it is to stated specifically in the deed. Additional charges, if any, is to be paid for availing the facility should be mentioned.
22. Right to sale: The Lessor has the right to sale the leased out premises during the Lease period by giving advance notice to the Lessee. The duration of advance notice will be as mutually agreed by the parties. This will help the Lessee to make necessary arrangement well in time.
23. Right of Lessee in case of new Lessor: This clause is to protect the interest of Lessee when the leased out premises is being sold. A clause may be inserted stating that the lease deed shall be binding on the new lessor until the expiry of the deed. On expiration, unless agreed by both the parties, the deed shall not be renewed.
24. No right to mortgage: The Lessee shall not have any right to mortgage the property or create any lien/ charge on the leased out property with any of the financial institution or bank.
25. Arbitration Clause: The arbitration clause should state the manner in which arbitration option can be accessed. The terms of appointment of arbitrators, the binding effect of the decision of arbitrators etc to be mentioned in the clause.
26. Jurisdiction clause: Jurisdiction clause state the area where the aggrieved party can seek for justice. Any aggrieved person can file a complaint or seek legal remedy only at the place where the jurisdiction lies. Therefore, it is very important to mention the place of jurisdiction in an deed.