Whether you are renting out a property or moving into one, a properly drafted rent agreement protects both parties. Many disputes between landlords and tenants arise simply because the agreement was incomplete or incorrect.
Types of Rent Agreements
Leave and Licence Agreement
The most common arrangement in urban India. The tenant is a “licensee” and does not get any tenancy rights. If the licence period ends, the landlord can reclaim possession relatively easily. Used mostly in Maharashtra and other states with strict rent control laws.
Lease Agreement
Gives the tenant stronger rights. A lease creates an interest in the property. Landlords in rent-control states prefer to avoid leases for this reason. Leases above 11 months must be registered.
Why 11 Months?
Agreements for 12 months or more must be compulsorily registered under the Registration Act, 1908. To avoid this cost and complexity, most landlords draft agreements for 11 months and renew them. However, an unregistered agreement cannot be produced as evidence in court — it only serves as collateral evidence.
Essential Clauses Every Agreement Must Have
- Names and addresses of both parties
- Property description and address
- Monthly rent amount and due date
- Security deposit amount and refund conditions
- Agreement duration and renewal terms
- Notice period for vacation
- Maintenance responsibilities
- Permitted use (residential/commercial)
- Rules on subletting
- Lock-in period if any
Security Deposit
The security deposit is typically 1–3 months’ rent in North India and up to 10 months’ rent in cities like Bangalore and Hyderabad. Specify when and how it will be refunded. Deductions for damages must be documented with evidence.
Stamp Duty and Registration
Even for 11-month agreements, stamp duty is payable. The amount varies by state. In Delhi, stamp duty on a leave and licence agreement is 2% of the annual rent. Get the agreement notarised at minimum; registration is recommended for higher-value properties.
Tenant Rights
A landlord cannot forcibly evict a tenant without following due legal process, even after the agreement expires. Changing locks or cutting electricity to force a tenant out is illegal. Tenants can approach the Rent Controller or a civil court for protection.
Landlord Rights
If a tenant does not pay rent or damages the property, the landlord can file a suit for eviction and recovery of dues. A well-drafted agreement makes this process much faster.