Salient points
Generally the following are the terms on which the
leases are signed.
1.
Period :
2 - 3 years with an escalation after 2 years on mutually acceptable terms.
Should there be no consent then the Lease is not renewed. Leases of 12 years
or longer are construed to be a deemed sale.
2.
Personal Lease :
Nearly 70 -80% of the owners prefer to have a personal or
an individual lease with the tenant. In case the company insists to sign the
lease then the way around this problem is that the owner is convinced to
sign the lease with the company for the exclusive stay of the prospective
tenant. It is clearly understood that as soon as the tenant leaves, the
house reverts back to the owner. Sub-lease is not allowed.
3.
Types of Leases :
It is the norm to have two to three agreements for the total
rent. Generally the heads are : Lease Agreement, Hire Agreement (for
fittings and fixtures) and Service and Maintenance Agreement. This
arrangement is legal and typically can be in name of the other family
members of the Owner. Lease agreement is signed by the Owner.
4.
Registration of Lease :
Though it has become mandatory for the leases to be
registered, our experience is that only 50% leases get registered. Should
registration be opted for, then the cost of Registration is borne by the
tenant. This includes the cost of stamp papers (1% of the annual rent
declared) , lawyers fee. Fore-noon of any working day is to be devoted for
the purpose.
5.
Formalities for Registration of Lease :
The legal requirement for having a property
registered either for Sale or Lease requires the following :-
·
Two photographs
·
Identity papers
·
Board resolution in case of company
authorising the person to sign
6.
Diplomatic clause :
This clause is an integral part of all the leases. This
allows the tenant to serve a notice of three or more months to the owner and
vacate the premises in the eventuality he is either transferred or asked to
leave the country. In this case the landlord refunds back the balance of the
unused portion of rent in advance with him. Lessor rarely has the option to
terminate the lease. In very rare cases, if agreed to mutually, this clause
is not a part of the lease which means that the lease is for a fixed period.
7.
Currency :
Leases are written in Indian Rupees. Very rare cases are
there where the owner has insisted on an official Lease in US Dollars.
8.
Important (Structure of the payment) :
It should be noted that mere ability to pay
the asking rent is not a sufficient enough reason for one to obtain the
desired house. Many owners contend that the incidence of taxes is very high
in India , hence they opt for various ingenious schemes to either eliminate
or hugely reduce the their possible tax burdens. Organisations having strict
accounting practices normally are seen to face great difficulties.
Organisations which are able to accommodate the various combinations, have
an easy time. It is best to be flexible in payment terms.
9.
Advances/Deposits :
Tradition is that the owners demand atleast one year’s
rent in advance and in many cases even the whole lease period in advance. In
these cases one to six months refundable security deposit is also asked for.
This deposit is towards breakage’s, unpaid bills etc. Normally, three
month’s rent is given as security deposit.
10.
Taxes :
There is no tax burden on the tenant. All tax burdens are the responsibility
of the Owner.
11.
Payment Terms :
Generally the money agreed to be paid in advance
including deposit is to be paid immediately at the time of signing of the
Lease until and unless there is a specific payment schedule that has been
agreed to before.
12.
Agent’s Fee :
Tenant pays an agent a fee equivalent to one month’s
rent. This is paid as soon as the contract is signed.
A
word of caution :
It is advisable that if a house is shown to you by an agent then never deal
for the house through another agent. Should you do so, you will have a
major problem on your hand
