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- March 20, 2023
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Why are rent agreement only created for 11 Months?
If you have ever lived in a rented home or rented a property, you must be familiar with what a rent agreement is. But do you understand why it’s only for 11 months? Otherwise, why is a rent agreement even necessary? Here is all the information you need to know about short-term rental contracts.
The legal connection between a landlord and a tenant is defined in a rent agreement, which also outlines the parties’ respective obligations. It’s always crucial to understand what is necessary to negotiate during such situations, visit our blog for more information! Both parties must abide by the terms and circumstances outlined in the agreement.
Why 11 months?
A lease agreement with a duration of no more than one year is not required to be registered, according to the provisions of section 17 of the Registration Act of 1908. This implies that leases of less than a year can be signed without registering. According to legal experts, “The specific alternative enables the parties to skip the laborious procedure of getting the document registered before the office of the sub-registrar and making payment of the registration fees.”
When a lease is less than a year-long, one can avoid paying stamp duty by choosing not to register the lease, saving money in the process. Typically, to avoid having to pay such expensive fees, the landlord and the renter agree not to register the lease.
The amount of stamp duty is determined by the rent and the length of stay if one chooses to register the rental agreement. The longer the tenancy, the higher the stamp duty. So, even if a rent agreement is registered, a shorter duration will help reduce the large lump sum paid in stamp duty. So, if it helps them avoid paying a heftier cost, both parties often stay on the same page.
If the property owner wants to end the lease early, an 11-month lease is in the landlord’s favour. “The rent is subject to rise at the landlord’s discretion. Also, landlords prefer rent agreements with shorter lease terms to minimize potential disputes and problems,” legal authorities’ state.
In a dispute, a registered rental agreement serves as reliable proof of ownership. If there isn’t a registered rent agreement, the landlord can have a hard time getting the tenant to pay for any property damage. Legal experts claim that because unregistered lease agreements are not admissible in court, they will have unfavourable effects on the parties’ ability to establish their rights. Examples include disagreements over eviction notices, lock-in periods, premature termination, renewal periods, etc.
Hence, it is always advisable to have a lease agreement for only eleven months, which can then be renewed on a case-by-case basis for another term of eleven months to prevent all these potential disagreements, registration issues, and stamp duty costs.
It is also important to keep in mind that Maharashtra law recognizes the notion of a leave and license agreement, which is valid for a maximum of five years and in which the owner, or licensor, permits the licensee to use the property solely for the specific purposes outlined in the agreement. In Maharashtra, leave and license agreements are more common than lease agreements since the licensee is only granted the right to occupy the property for a certain time, while the lessee is granted rights that are more protected by the law.
Conclusion
Legal experts claim that even when the provisions of the lease agreement suggest otherwise, it is difficult to get one’s property vacated when it is tenanted or leased out in India because of the complicated regulations and legislation favouring tenants. Due to procedural mistakes or delays, it often takes years for the owner or landlord to receive justice, during which time the renter or lessor might continue to use the property. So, you must stay on the right side of the fence and have the knowledge to figure your way around the real estate world. Or an easier solution is finding a partner that is the right consultant – which is EC! We are more than just brokers, we are consultants!
EC’s wide range of services allows for the tenant and renter to be in constant tandem!
