If you’re looking to put a property on rent or thinking of letting out a property on lease, then rent agreement is a thing that you must know before you initiate your quest for the right property. A property can be occupied on lease according to the Registration Act, 1908. As per this act, a registration of a lease agreement is a must if the rental period is more than 12 months.

What Is A Rental Agreement?

A rental agreement is one of the important aspects most of us often don’t pay much attention to it. Also known as the lease agreement it is a legal contract made between the landlord and the tenant. The agreement is a very important legal document comprising all the terms and clause related to letting out a property on rent. It may include factors like monthly rent, security deposit, basic information regarding the property such as size, address, type, and the duration of the agreement. Both the tenant and landlord would be bind after signing this document. Therefore, it is advisable to thoroughly go through a rent agreement deeply and reading out all the rules and clauses before signing it as you can negotiate on certain factors.


Why Is It Important?

The vast majority of us who have ever taken a house or property on lease or leased a property, have encountered some type of friction throughout the tenure period. This must have developed a sour experience to a tenant-landlord relation. Such issues could hold legal grudges to avoid which both parties can legally make things simpler beforehand via a rental agreement. The agreement is very vital for rentee and landlord as it can provide property’s safeguard to the landlord whereas it protects the rentee from facing unlawful demands by the landlord.

It additionally anticipates renter select ownership of the property for the term specified in the agreement. It is also a powerful document for the owner in case there’s no demand of security deposit in advance where renter can claim unlawful reimbursement. In that way, you can see that this a vital document in the modern age scenario for both the owner and tenant.

What Are The Factors That Must Be Included In The Rental Agreement?

  1. Name Of The Occupants:

Imagine a case where you’re the owner of a property and your tenant suddenly vacates the place or you’re living in a property as a tenant and people visiting your place or living with you is a concern for your tenant creating issues between you two. In both these cases, the righteous power of both the parties must be appreciated which is taken into consideration legally with a powerful document like a rental agreement. Mentioning all the names of the occupants in the rental agreement is a must so as to give a clarity about every individual living or should take responsibility of the place.

  1. Duration Of Tenancy

To make sure the tenant will vacate the place on time or would not unlawfully try to take possession of the property, mentioning the duration of tenancy in a rental agreement can put the owner on a safer side legally. On the other hand, the property owner cannot unlawfully force tenant to vacate the place prior to the decided duration of the tenancy if it is on your rental agreement.

  1. The Rental Amount

The rental sum and instalment systems are specified here. The sum gathered every month, the date at which the lease is to be paid, punishment statement for any late instalment, and so forth. This will guarantee that neither one of the parties endeavours to assert unlawful money related requests and adhere to the stipulations expressed in the assertion.

  1. Cost For Maintenance

During the tenancy period, the maintenance cost that should be bored by either the tenant or the landlord must be mentioned here. Any expenses including major or minor repairs must be covered within the rental agreement as a clause to get further clarity about these things in the future or during the tenancy period.

  1. Rules That Must Be Practiced:

The agreement ought to obviously mention the treatment of the property and its surroundings. Factors like subleasing and restrictions to a major alteration of the premise must be mentioned here clearly.

  1. Security Deposit (If Any)

Whatever security deposit has to be paid should be mentioned hereby in the rental agreement and should be signed by both parties as a sign of nodding on those clauses mentioned in the agreement. By this way, the tenant can protect themselves from the landlord’s unlawful financial demands if he wishes to vacate the place immediately. In a similar manner, a landlord will have a safety assurance in the name of the security deposit for a scenario where tenant vacates the place without paying any rent.

  1. Renewal And Notice Period:

For the sake of prior knowledge, renewal and notice period should be mentioned properly in the agreement. The date should be mentioned properly in the document and should be signed by both the parties.

  1. Amenities Provided

Just for the safe side, all the amenities that is provided within the property must be mentioned in the agreement along with their latest condition so as to avoid any damage or the financial settlement of any repairs regarding this.

  1. Exit Clause

To clear out any penalties before leaving must be resolved under this clause.

  1. Signature And Date

Both renter and landlord must sign the agreement at the end along stating it as a nod to all the clauses mentioned in the rental agreement failing to which might lead them to face legal penalties.

These were the major clauses every rental agreement must comprise and is a basic format of every rental agreement. The format of the rental agreement is of high significance and you must be aware of it before signing one. Remember, always read all the clauses carefully before signing the document.


One more major aspect of any rental agreement is the Police Verification of the tenant. This helps in a background check of the tenant so that any unlawful activity must be prohibited from using your property. This is an important thing to ensure the safety of your property and its neighbourhood. It is mandatory and not performing this is a punishable offence under Section 188 of Indian Penal Court.

Why Most Of The Rental Agreements Are Usually Of 11 Months?

According to the Registration Act, 1908, the registration of a lease agreement is mandatory if the leasing period is more than 12 months. To avoid stamp duty and other charges people generally opts for a rental agreement of 11 months which can later be renewed. Below are the stamp duty rates in Delhi in which a flat fee of INR 100 is added is security fee is paid. Also, a flat fee of INR 1100 is also paid as registration fee via Demand Draft (DD).

TIME STAMP DUTY COST (On total average annual rent)
Up to 5 Years 2%
5-10 Years 3%
10-20 Years 6%

So, in order to avoid this stamp duty charges both tenant and landlord mutually usually opts for 11 months rental agreement which can be extended if the costing is mutually shared by both the parties.

Rental Agreement Format:

Here’s a sample format of rental agreement so as to give you a glimpse of how it should be:


You Can Download A More Elaborate Version  Here

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This post was written by Resident Blogger.

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