Rental agreement is an important supporting document for business registrations and to be used to protect the rights of tenant and a landlord. Beyond its commercial use, used for residential dwellings like apartments, houses, villas, farm houses. Know more on the important things to keep in mind along with a sample rental agreement
A rental agreement is a "contract of rental" usually written between the landlord of the property (Owner) and the tenant of the property. Rental Agreement contains the pre-discussed terms and conditions under which the property is rented out between the landlord and tenant. The rental agreement can be for residential or commercial purpose.
The person who owns the property is known as "landlord" (or owner) and the person who takes on rent is known as "tenant".
Generally the rental agreement needs to be written on stamp paper and it contains the following information
Generally, the rental agreement is made for 11 months. It needs to be printed on a stamp paper applicable as per state laws. Also needs to be properly signed by Landlord and Tenant along with 2 witness signatures with their full names and addresses.
Registration of rental agreement is not required if it is made for 11 months. If the duration of rental agreement exceeds 12 months, it needs to be registered with the state authorities and stamp duty, registration charges required to be paid. Hence to avoid the formalities of registration, rental agreement is made for 11 months.
Registration of the rental agreement is very important if it's meant for commercial purpose.
If the property is on rent, rental agreement is mandatory for any kind of registrations like GST. Rental Agreements are mandatory for Private Limited, LLP, Firm registration etc.
If the property is on your name or any of your partner / director name, and the end use of the property is for a business, instead of rental agreement, one need to have a no objection certificate to use the premises for business purpose.
It is not mandatory to notarize the rental agreement unless if there is any specific requirement from the registration authorities. Generally rental agreement printed on stamp paper serves the purpose.
Security Deposit is the amount that a tenant pays to the landlord at the start of tenancy. Security Deposits starts from minimum 2 months rent to rent of whole year depending on the locality. The landlord can either adjust the security deposit against the damages or arrears of the rent or refund to tenant at the end of tenancy.
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