Point to Consider Before Drafting of Tenancy Agreement

Point To Consider Before  Drafting of Tenancy Agreement

In day to day life, every one has to deal with tenancy agreement and people use to take the standard format of the tenancy agreement for accommodation available in various books and website without understanding the legalities. But actually, the tenancy agreement is not so easy thing as it appears from the surface. One has to be very careful while drafting the tenancy as it  may effect both the parties of  the agreement. The dispute arises normally of eviction or wrongful eviction. At that time the agreement condition read with the applicable local accommodation control Act has to be in harmony so as to safeguard the mutual rights.

Here, we are giving the points which may be beneficial for drafting a tenancy agreement.

1)      Tenancy Period : Any tenancy period for more then Eleven months needs to be mandatorily registered. If the agreement  for two or three years of the tenancy is not registered then at the time of dispute the agreement will not be used as exhibit and it will work only as collateral proof of evidence and do not serve a better purpose.

2)      The Lease rent & security deposit : The amount of rent per month, escalation every year and date of payment of the rent and any interest payable on the late payment needs to be checked. It need to check as to How the refund of security deposit or adjustment will take place.

3)      Electricity meter installation, security deposit for electricity meter expense to be checked as to who will pay. Normally, it is the payable by lessor.

4)      Expenses of the repair: There may major repair and minor repairs. Normally, responsibility of major repair lies with lessor and the minor repair can be taken care of by lessor.

5)      Maintenance charges of the society : This is vital point to decide the responsibility of the payment of  charges of society.

6)      Point of Sublet : Other than the general condition of the use of accommodation, the point of sublet needs to be checked as the tenant shall not sublet the premises. It create great hardship for the lessor, if tenant sublet the premises to the stranger.

7)      Property Tax and Service Tax : The responsibility lies with the lessor.

8)      Sell & transfer and assignment of the lease rental : It the important point where it need to be discuss whether the lessor has right to sell and transfer of the premises or can he direct the lessee to pay the rental on so assigned entity.

9)      Stamp duty & registration : (if application) responsibility needs to be clarified as to whether lessor or lessee or both (50:50) will bear the cost of registration.

10)   Termination Clause :  The termination clause is important as to decide whether the agreement have lock-in period, or it is terminable by 30 days notice from either party.

11)   Effect of termination : If the tenant has invested some money in the premises then it needs to be discuss what will happen to the investment, interiors decoration, alteration, modification so done with the premises.  Any damage to the  property needs to be checked.

12)   Handover of possession : The Handover of the passion should be documented and key to given in presence  of witness so the handover of the possession can be prove in the event of dispute.

13)   Renewal of agreement : The point to check is whether the agreement can be automatically renewable or it require  the fresh agreement to renew.

14)   Jurisdiction, Notice, counterparts of the agreement : It is the routine sort of clause in the agreement.  

15) Applicable Laws : Before signing of the agreement one should get clarity over applicable local law because it is well settled principal of contract act that any contract contrary to the law shall remain void to the extent of the restriction of the law.

Regards

Ambrish