We frequently witness clients treating tenant agreements and lease agreements as the same thing. An agreement for a business facility called a lease is made between a landlord and a tenant. To ensure no misunderstandings or problems throughout the duration, leases are normally highly specific about the tenancy terms. The landlord and tenant’s obligations (“warranties”) are specifically outlined in the lease. The landlord further promises to act responsibly when considering a transfer of the leases to a third-party provider during the term and to comply with the Health & Safety at Work Act 2015.
The Residential Tenancies Act of 1986 (“Act”) governs tenancy agreements for tenants of residential properties. Tenancy agreements that outline either party’s responsibilities are typically less thorough or exacting than the warranties stated in leases. Preserving the property in an acceptable condition
Types of Tenancy Agreements in India
A rental agreement contains basic details, such as the name of the owner of the property, the renter, the terms of the Agreement, and the amount of the rent to be paid, during the term of occupation. The tenancy agreements in India are of the following three types.
and allowing the renter to use it quietly are two of the landlord’s principal duties. Periodic tenancies, which last for longer than 90 days, and fixed-term tenancies are the two different kinds of tenancies. Periodic tenancies will be the subject of this essay.
Types of Tenancy Agreements in India
A rental agreement contains basic details, such as the name of the owner of the property, the renter, the terms of the Agreement, and the amount of the rent to be paid, during the term of occupation. The tenancy agreements in India are of the following three types.
- Rent agreement
- Lease agreement
- Leave and License agreement
- Lease Agreement A lease agreement is typically necessary for longer occupancy durations. Landlords often opt for leases to stabilize their income against fluctuations. This agreement is a contractual arrangement between the landlord and tenant, granting the tenant the right to use the property for a specified period (usually over 12 months). Unlike a rent agreement, a lease binds both parties for the agreed-upon duration. Some leases extend up to 99 years. Furthermore, a lease establishes a vested interest in the property, is transferable, and confers inheritable rights.
Rental Agreement A rental agreement serves as a legal contract between a property owner and a prospective tenant seeking temporary possession of a designated property. This document encompasses various particulars, including the names of both parties, property description, agreed-upon rent amount, late payment penalties, grace period, security deposit sum, entitlements to facilities, parking provisions and rights, repair and maintenance responsibilities, and property insurance clauses, among other stipulations.
Advantages And Disadvantages
Tenancy and lease agreements each have benefits and drawbacks. Rent increases quickly, allowing the landlord to renegotiate the conditions of the deal more frequently than under a lease, which is favourable. Landlords are permitted by rental agreements to rent out homes that might not be appealing to long-term tenants. A Lease, on the other extreme, benefits a landlord since it offers the security of long-term, guaranteed income. It benefits a tenant since it fixes the rental price and term and cannot be altered, even if asset or rent values increase.
To avoid legal disputes later on, the agreements must clearly state the preferences, expectations, and obligations of both the landlord and the renter. Also, Rental and tenant agreements might differ in flexibility and structure. For instance, some tenant agreements might stipulate a pet policy for the rental property. In contrast, others might add a separate supplement with additional terms and conditions, such as those governing loud noises.
Essentials of a Tenancy Agreement: Navigating the rental ropes
As an Indian tenant, it’s crucial to understand the ins and outs of a tenancy agreement. After all, it’s a legally binding document that sets the terms of your rental relationship with your landlord. But what exactly is a tenancy agreement? And what should it contain? Let’s delve into the essentials of a tenancy agreement.
While we have covered what is tenancy agreement, i.e., a contract between a landlord and a tenant that outlines the terms and conditions of the rental arrangement. It’s a crucial document that sets the boundaries and expectations of both parties.
Key components of a tenancy agreement:
A valid tenancy agreement should include the following elements:
- Names and addresses of the landlord and tenant: This information should be accurate and up to date to ensure that both parties are aware of who they are dealing with.
- Description of the property: This should include the address, size, and layout of the property, along with any fixtures and fittings that are included.
- Duration of the tenancy: This should specify the start and end dates of the tenancy, and any renewal or termination clauses that may apply.
- Rent amount and payment due date: This should include the amount of rent payable, and the frequency of payment. The due date for rent payment should also be clearly specified.
- Security deposit amount: The agreement for tenancy should outline the amount of security deposit that the tenant is required to pay, and the conditions under which it will be refunded at the end of the tenancy.
- Maintenance and repair responsibilities: This should specify who is responsible for carrying out any maintenance and repairs to the property, and the conditions under which the tenant is required to pay for them.
- Restrictions on subleasing and alterations: This should specify any restrictions on the tenant’s ability to sublease the property or make any alterations to it.
- Termination and renewal clauses: This should outline the conditions under which the tenancy can be terminated, and the process for renewing the tenancy if desired.
What are the key components of a tenancy agreement?
A legal tenancy agreement must contain the following essential documents:
Property description: Size, address, property layout, fittings and fixtures (if any) must be contained in the description of the property.
Security deposit: A tenancy agreement must highlight the security amount a tenant needs to pay and the scenario under which the security deposit is to be refunded as the tenure of tenancy ends.
Termination and renewal clause: A tenancy agreement should highlight the conditions under which the termination of a tenancy agreement can happen and the tenancy renewal process, if needed.
The rental cost and due date of the payment: The amount of rent to be paid and payment frequency must be carefully mentioned in the agreement. The due date must also be clearly covered in the document.
Name and address of the parties involved: The address and personal details of the involved parties must be accurately updated in the tenancy document so that the involved parties must be updated on the other party they are dealing with.
Term of tenancy: The starting date and the closure date of tenancy must be specified in the tenancy agreement, along with the termination and renewal clause (if any).
Responsibilities associated with maintenance and repair: A tenancy agreement should clearly mention the party to undertake the responsibility of repairs and maintenance of the property. It should also mention the scenario under which a tenant is responsible for making payment.
Subleasing and alteration-related constraints: A tenancy agreement should specify any limitation of a tenant for property subleasing and alterations to be made (if any).
Conclusively, the agreements must define the preferences, expectations and responsibilities of both landlord and the tenant in a clear manner so as to avoid legal tussles at a later stage.