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Rent Agreement

Everything you need to know about rent agreement

As home ownership may sometimes be inconvenient or unaffordable, a majority of the migrant working population in India’s major cities live in rented homes. So much so that many states in India are currently busy working out the details of more future-aligned rental policies, to promote this segment of housing in the country.
In fact, the union cabinet recently gave its approval to the Model Tenancy Act, 2019, a piece of legislation that is likely to significantly improve the rental real estate market in India. The central version will be circulated to states for adaptation, by way of enacting fresh legislation or amending existing rental laws suitably.
According to the draft Model Tenancy Act of the union government (all states have to base their draft rental laws on this act), the tenant must sign a rent agreement when entering into a rental arrangement with a landlord. The rent agreement must include the terms and conditions that shall be binding on both the parties.

Legal validity of rent agreement

To save costs, tenants and landlords sometimes reach a verbal agreement about the tenancy and avoid executing a rent agreement. Some may also document the arrangement and put terms and conditions with respect to the tenancy but decide not to register the document. This is because both parties will be responsible to pay a registration charge if a rent agreement is created and registered. The landlord will also be obliged to report his rental income, once the rent agreement finds legal validity. However, entering into a rental agreement without registration is illegal and could prove to be a risky business for both parties, especially in case of a future dispute.
Until a rent agreement is registered with the sub-registrar’s office, it has no legal validity. It is in the favour of both the parties, to draft an agreement with specific terms and conditions and to get it registered. After drafting the rent agreement, the landlord should print it on stamp paper. Once the tenant and the landlord sign the documents in the presence of two witnesses, they should register it at the sub-registrar’s office, after paying the required fee.
After states set up rent authorities in cities following the implementation of the draft law, landlords and tenants would have to be present before the authority to get the rent agreement registered.

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