Why are the rent agreements made only for 11 months?
When we move into a new home or flat, we typically create a rent agreement. This agreement includes various clauses, such as the rental escalation percentage, electricity charges per unit, water charges, and the fixed rental amount. These clauses are agreed upon by both the owner and tenant and form the basis of their rental agreement.
Whenever we create the rent agreement, you may see that, in most cases, it is made for the time period of 11 months. Ninety-nine percent of rent agreements are created, encompassing 11 months time period. But have you wondered why the rent agreements are only made for 11 months?
What Is Rent Agreement?
A rent agreement is a legally binding document that outlines all the terms and conditions agreed upon by the owner and tenant. It can only be created with the owner or the person with power of attorney by the owner. Understanding this process should equip you with the knowledge and confidence to navigate the legal aspects of renting a property in India.
What Is The Significance Of An 11-Month Rental Agreement?
A rent agreement signifies the legal responsibilities of both the property owner and tenant. These responsibilities include timely payment of rent, maintenance of the property, adherence to the agreed-upon terms and conditions, and resolution of disputes in a fair and legal manner. The agreement also outlines the consequences of failing to meet these responsibilities. The legal terms and conditions for the property's rental, upkeep, security, etc., are contained in the 11-month lease. The rental agreement helps both parties quickly resolve disputes.
What Is The Legal Validity Of A Rent Agreement In India?
To make a rent agreement in India. You need to jot down all the terms and conditions on 100 rupees stamp paper. You will need two witnesses, too, with their signs for the legal validity of a rental agreement. After the clauses are added to the stamp paper, the owner and tenant, along with two witnesses, must sign the document. The witnesses play a crucial role in validating the agreement. They must attach their ID proofs and signatures to the document, which helps ensure its legal validity.
It's important to note that an 11-month rent agreement must be renewed within 30 days prior to its expiration. Failure to do so can result in the landlord legally evicting the tenant. The renewal process involves drafting a new agreement with updated terms and conditions, which must be signed by both parties and the witnesses. The 11-month agreement does not need to be registered in the sub registrar's office, but it should be notarized. Agreements of more than 11 months have to be registered in the sub-registrar’s office.
Why are the rent agreements often made for 11 months?
No Registration Needed: No registration is required for an 11-month lease.Clause (d) of sub-section (1) of the Registration Act, 1908 states that rental agreements lasting one year or more must be registered. The Rent Control Act clearly specifies that the 11-month rent agreement is exempt from the imposition of any stamp duty or registration charges.
These agreements hold legal validity and can be renewed on a 100 rupees stamp paper if the tenant and landlord agree to extend the validity. This assurance of legal protection should instil a sense of security in you as a property owner or tenant.
No Extra Fees: In accordance with the Rent Control Act, there are no stamp duty or registration fees for parties creating an 11-month lease. When electing to extend the rental term, they can also readily renew such agreements utilising stamp duty paper that costs Rs. 100 per piece.
Increased Rental Flexibility: Both the landlord and the tenant have more flexibility when using an 11-month rent agreement type. Given that they can assess the monthly rental payment in less time by taking the market conditions and their budget into consideration, after a year.
Download the Rent Agreement Form Or Format
Conclusion
Rent agreements are strategically made for 11 months to avoid the additional financial burden of stamp duty and registration charges. If you opt for a rent agreement exceeding 11 months, you'll be liable to pay these extra charges, along with fees for the advocate to complete these tasks.
By understanding this, you can make an informed decision that empowers you to save on unnecessary expenses. So, it is better to make an eleven-month rent agreement to avoid these charges, and it also provides more flexibility to the owner and tenant. Make changes according to the market or as needed.
.webp)
.webp)
.webp)
