Rental Agreement – Format & Terms
A rental agreement or lease agreement, an official contract signed between the owner of a property and the tenant who wishes to take temporary possession of the property for a particular period of time. Further, it shall be drafted on a stamp paper. However, there is a minute dissimilarity between the two which is discussed in the later part of this article.
Types of rental agreement
Contents of a rental agreement
Terms commonly used in a Rent agreement
Types of Rental Agreement
In India, currently, there are 2 types of rental agreements
A lease agreement is an agreement that can be used to lease anything including car, house etc and is valid for such period as prescribed on the mutual agreement. The rental control laws are currently favouring the interest of tenant as it protects the tenants from sudden or unfair eviction and prevents the landlords from overcharging the tenants. In the case of lease agreements, the right to the property gets transferred from the landlords to the tenants, making it difficult for the landlord to evict the tenant.
On the other hand, rental agreements are generally for renting a house and is entered into for a period of up to 11 months, allowing renew option of such agreement after the expiry. A rental agreement for the tenant is just a contract to occupy the premises for duration of up to 11 months. Further, in a case of tenant eviction from the property, rental agreements allow the landlord to take more measures. This is the reason why a rental agreement is preferred by most of the landlords.
Contents of a Rental Agreement
Common contents of a rental agreement include:
- Name of the landlord
- Name of the tenant
- Property details
- Rent amount and due dates for payment, late charges, grace period.
- Payment mode of rent
- Termination method of the agreement before the date of expiration and charges if any
- Security deposit amount and the account where it is kept
- Charges for utilities provided
- Premises facilities which the tenant can use such as security systems, play-court etc
- Rules and regulations and the penalty for any violation of such rule and regulations
- Identification of designated parking spaces, if provided
- Handling tenant repair requests
- Emergency requests procedures
Security deposit is a kind of advance payment which has to be paid by the tenant to the landlord, at the time of signing the contract. This amount shall be repaid by the landlord at the time of contract cancellation. Generally, the amount of security deposit is from 2 or 3 months, however, this can go up to 10 months of the rent. Moreover, the landlord can use the whole or a part of the security deposit towards any damages caused by the tenant such as damage to the furniture, appliances etc.
Terms Commonly Used in a Rent Agreement
Rent: In exchange for the property rented the payment or consideration as the case may be made by the tenant to the landlord.
Duration: The time period for which the premises have been rented out.