No need to register if tenancy is less than one year
In accordance with the requirements of section 17 of Registration act, 1908, a lease compromise Not compulsorily registerable for a period exceeding one year. This means that rent agreements of less than 12 months can be entered into without registration. “The said option enables the parties to register the document at the sub-registrar’s office and avoid the tedious process of paying the registration fee,” says Neeraj Kumar, partner, DSK. legal,
Landlords prefer 11 months tenancy to avoid legal trouble. “In a lease where the tenure is for a longer period, often terms such as rent, tenant And the term is used which invites the possibility of tenancy by the other party (tenant) under rent control laws which are favorable to the tenant. This may eventually lead to a protracted court battle in the dispute case,” says Soumi Bhatt, general counsel, BankBazaar.com.
Keeps the initial cost under control
Not going for registration, when the tenancy is less than one year, the cost of stamp duty is also saved, if they opt to go for registration of rent agreement. Generally, the landlord and tenant mutually decide not to register the lease so as not to pay such high fees.
If one decides to register a rent agreement, the quantum of stamp duty depends on the rent and the period of stay. The longer the tenure of tenancy, higher will be the stamp duty. Hence, even when one goes for the registration of the rent agreement, having a shorter tenure helps in reducing the large lump sum amount payable as stamp duty if the tenure is short. So both parties usually stay on the same page as it helps them avoid paying higher fees.
Notarized rent agreement is used as a substitute
To make a rent agreement in case of non-registration notary This is also an option many people go for. Kumar says, “Though the rent agreement does not provide for the requirement to be notarized, it helps in establishing the authenticity of the parties to the agreement.” This is the reason why many people get the rent agreement notarized.
Who benefits more from an 11-month agreement – the landlord or the tenant?
The 11 month rent agreement is in favor of the landlord when it comes to terminating the agreement within a short period of time. Kumar says, “Landlords get an opportunity to increase the amount of rent. Also, to avoid potential disputes and hassles, landlords prefer rent agreements for shorter durations.”
It is easier to come out of an unregistered agreement that is simply notarized. An 11-month lease agreement can be terminated after 11 months through a fairly simple one month’s notice. Former judge and lawyer Bharat Chugh says, “The 11-month notarial lease gives the landlord more flexibility as the rent can be determined as per the market rate and can be renewed on a regular basis.” Supreme court,
While arguing that such an arrangement benefits a tenant more, Chugh says, “If it is not specifically agreed upon in the lease agreement between the executing parties, it is the lessee’s responsibility.” is to pay the applicable stamp duty. Thereafter, from a monetary point of view, a tenant gains more from an 11-month agreement as he can avoid the responsibility of paying the applicable stamp duty and registration fee.”
Admissibility in Court – Notarized or Registered Lease Agreement
From a legal point of view, a notarized rent agreement, if registration is otherwise required, is inadmissible as evidence in a court of law. Therefore, a tenant cannot use the unregistered agreement to claim any rights, says Kumar.
However, a notarized rent agreement cannot be dispelled as an invalid document. “At present, it is legal and valid to draft an 11-month notarized rent agreement. Stamp paper of Rs 100 or Rs 200 is usually used for drafting such rent agreements by public notaries.
However, longer-term agreements are safer and give more rights and duties to both parties, Bhatt says.
Disadvantages of not registering the rent agreement
A registered rent agreement signifies a valid proof in case of dispute. In the absence of a registered rent agreement, if any damage occurs to the property, the landlord may find it difficult to recover the amount from the tenant. Kumar contends that an unregistered rent agreement, being inadmissible in courts, would bring unsuitable consequences for the parties to prove their rights under the rent agreement such as eviction notice, lock-in period, premature termination, renewal period. Disputes related to etc.
It is always advisable that the parties have to pay the requisite stamp duty on the rent agreements proposed to be executed by them, whether for a lease of 11 months or for a longer period. “It is beneficial for the parties to execute the residential rent agreement for at least 11 months so that the other party does not interfere with the rights and benefits of the counterparty and creates binding and enforceable obligations on both the tenants and the owner,” it says. Huh. Chug.
Why should long term tenants go for registration
It is better to go for a registered rent agreement when you are planning for long term tenancy. “If the parties wish to have a long tenancy and relationship, they should register it,” says Chugh.
For example, a tenant takes a premises for a period of five years and makes substantial investments on that basis, he should protect his rights by registering the lease agreement. Because if it is not registered and notarized only, the landlord, notwithstanding the period of five years, may evict the tenant without assigning any reason and giving one month’s notice without any breach as the contract shall be deemed void and void by the Court. Zero.