You must have heard of the term rental agreement. Here, we are going to talk about the importance of a rent agreement and why it is such an important document. We are going to shed light on several aspects related to the rental agreement, the component it has, and the related details.
What Is A Rental Agreement?
A rental agreement is a contract between the owner and the tenant wherein the owner gives the tenant the legal right to stay at his/her home for a specific period of time. This is a legal document and can thus serve as a reference that helps in becoming the key standpoint in case of any dispute that may occur later on.
You can choose to have a written agreement or it can be verbal and sometimes simply implied. However, we will always recommend opting for a written agreement because it helps in having legal and binding proof that can be used to re-check the clauses should the need arise. The written agreement serves as a piece of evidence, if there are any disputes between the tenant the owner and the terms as stated in the agreement will be used to sort out the differences.
The Need To Register A Rent Agreement?
A rent agreement is considered legally binding and can be upheld in a court of law only if it has been duly registered. The Registration Act, of 1908 states that a lease will be inclusive of all entities including but not limited to residential and commercial properties, fisheries, hereditary allowances, and more. The law is binding to all states except Jammu and Kashmir. The law states that if any of the property is leased out to a tenant and the tenure exceeds 11 months, the rental agreement will have to be compulsorily registered.
So, if your agreement is for a period of fewer than 11 months, you will not need to register it at all. As the registration invokes a fee, most people choose not to register and this is why rents are usually offered for an 11-month duration and then it is extended as and when the need arises.
Many times, having such agreements that are not registered is not considered admissible in a court of law and may not offer any legal protection whatsoever.
The Documents Needed
Here are the details of the documents that are needed for the sake of registering the rental agreement.
- The proof of ownership or the property title document
- Two photographs of each of the party and both the witnesses alike
- The route map of the property that has been leased out
- The property documents or the tax receipt of the property that will be leased
- A copy of the address proof for both the parties involved and the witnesses. You can choose from an Aadhar card, passport or the bank passbook
So, make sure that you have all these documents ready with you when you are looking to carry out the rental agreement registration.
The Charges For Registering The Document
The registration charges are going to vary from one state to the other. The stamp duty charges also vary as per the state. So, it is your responsibility to check the details of the charges and then make the payment accordingly.
A lot of states offer rebates and concessions for women’s ownership too. Even senior citizens are likely to get a discount if the property will be bought in their name. So, it is upon you to analyse these details and then settle the exact amount that you have to pay.
One thing that is very clear is the fact that if your rental agreement is for a period spanning less than 11 months, you are not bound to carry out the registration. A lot of people are doing so now simply because it helps in having a legally binding document.
A lot of states keeping in mind, the dawn of the digital era have started the process of online registration. This has made things remarkably easier for everyone involved.
Here is what you need to do for the sake of carrying out the process.
- First of all, the owner needs to create a profile on the e-filing website. Make sure to adhere to all instructions and fill in the particulars accurately
- After the profile has been created, you need to enter the different property details including the type, the area, the village, the tehsil, and more. Make sure to fill in all the particulars as requested and the entered details have to be fully accurate.
- When you are done with this, you will find the option of payment of stamp duty charges and fees. All you need to do is generate an online challan receipt.
- You can choose your payment method and then have the fee paid easily.
- When you are done with the payment, you will need to book an appointment at the sub-registrar’s office.
- On the day of the appointment, you need to produce all the documents and then make sure that the property gets registered successfully.
So, this is the whole process that you need to be familiar with. If you prefer to make payment online, you can choose to do so and it will serve your need well.
Validity Of The Online Rent Agreement
The online rent agreement will be considered legally binding if it meets the criteria listed below
- The agreement has been signed by both the parties involved if it was digitally signed. The document then needs to be printed and signed again in the presence of the sub-registrar
- The agreement needs to be printed on stamp paper of the right value. If e-stamping was done, the right value of the stamp needs to be fixed at the very beginning
- If the agreement was drafted with the mutual consent of both the parties involved
- Always remember that all online agreements need to be registered at the sub-registrar’s office. If it is not done, it will not be considered legally valid. If you end up in a dispute, the agreement will not be considered valid if it was not registered at the office.
In absence of an agreement, such disputes can get downright ugly and the right justice may not be served.
The Hard Copy
While there is a provision for having the registration done digitally, you will still need to get a hard copy. This has been made important because the final step is to be executed at the office of the sub-registrar.
The site has been so designed that when the process is over, the agreement generation service will send the hard copy of the digitally signed rent agreement along with the printed e-stamp paper to the address that has been listed by you.
This is why it is absolutely important to ensure that you fill in the right details of your address or else the document will not be able to reach you. Usually, the delivery takes anywhere between 3 to 5 days.
Mostly, people don’t want to face legal hassles and in the past years, disputes have become more common than ever between the tenants and the owner. This is why it is important to register the documents as this offers the right legal backing.
Imagine a case wherein your tenant refuses to vacate your property or he has refused to pay the rent. In both of these cases, you will need to move the court and if you don’t have any agreement, the court will not be able to be of much help.
So, most people choose to have their documents registered to weed out any unwanted disputes in the future. Also, when you are preparing the document, make sure to list down all clauses meticulously so that you know what are the terms and conditions should there be any issues later on.
Are Unregistered Rental Agreements Valid?
This is one common question that a lot of people have. As registration is compulsory only if the rental period exceeds 11 months, people often wonder about the validity of such non-registered agreements.
Always remember that an unregistered rental agreement will only be valid if the rental tenure is 11 months or less. Should the duration exceed 11 months and you still don’t have the agreement registered, you will not have any backing of the law. This will lead to several problems when and if you run into a dispute as there will be no legal evidence to prove your case.
The Difference Between Notarized And Registered Agreements
A lot of people believe that both notarized and registered rental agreements are one and the same thing. They think they can be used interchangeably, but this is not so.
So, let us see what is the difference between the two.
A notarized agreement is a simple form of rent agreement that has been merely printed on stamp paper. It is attested by a public notary who could be your advocate or attorney.
A registered rental agreement is also printed on stamp paper. But it needs to be registered with the sub-registrar of the area. You will have to take an appointment and both parties along with two witnesses need to be present.
Even if you choose online registration, the final step sell needs to be done in person. You have to be present in front of the sub-registrar at his office.
Registered agreements are permissible in a court of law and have legal standing. The notarized documents, on the other hand, are not admissible in a court of law. If you enter into a dispute, these documents cannot be used to prove anything in the courtroom.
Can a rental agreement be for just three months?
Yes, you can choose any time frame for a rental agreement. Rental agreements with a period of fewer than 11 months need not be registered but, a duration exceeding 11 months makes it compulsory for the documents to be registered.
Can you sign the rental agreement online?
Yes, you have the provision to register the document in online manner. However, even when you have a digitally signed document, you will still need to visit the sub-registrar office. You need to take a printout and get the final registration done in person. Two witnesses, one from either end should also be present during the signing process.
Is a notarized agreement the same as a registered rental agreement?
No, even advocates and lawyers can sign the stamp paper and it will be deemed as notarized. For registration, one has to be sure that they are opting to head to the sub-registrar’s office. The notarized agreements are not admissible in a court of law. The registered documents however are admissible in a court of law.
Also, check out the details of tax on rental income too.