Here’s why rental agreements are made for 11 months

 Here’s why rental agreements 

are made for 11 months

 

       Along with saving money on the stamp duty and registration fee, there are many other benefits to renewing rental agreements every 11 months.  Read on to know why most tenants and landlords prefer this arrangement

As a tenant, one desires to get the ideal house on an affordable monthly rent.  However, while signing the agreement, you might have probably wondered why it is made for 11 months and not a full year.  Here’s why some tenants and landlords prefer the 11-month tenure for the rental agreement:

Study the documentation

A rental agreement, also known as a lease agreement, is a legal document signed between the landlord and the tenant.  It is usually drafted on stamp paper.  It lays down all the conditions for both parties to follow and safeguards the interest of both parties too.

      It is an important document that protects the rights of the landlord and tenant and prevents unscheduled rental hikes and eviction without prior notice of at least one month.

       A typical rental agreement consists of components such as the security deposit, monthly rent, information regarding the property ( square footage, address, and type ), contents of the property, and most importantly, the duration of the agreement.  The rental agreement has to be signed by the landlord and tenant, as well as two witnesses who are not related to either the landlord or tenant.

The duration of the agreement

A rental agreement is a crucial document to resolve any future disputes between the landlord and their tenant.  Across India, the rental agreement is usually made for a period of 11 months.  This is because according to section 17 of the Indian Registration Act, 1908, every agreement for the leasing of immovable property from year to year, or for any term exceeding one year, is required to be compulsorily registered.  Thus, this section will be applicable on lease agreements that last for a year, significantly increasing the cost.  In order to avoid the registration of the rent agreement, most agreements are drafted for a period of 11 months instead of 12 months.

                 Another significant reason for the 11-month rent agreement is that once an agreement is registered, it gives the tenant certain rights to the property itself.  This can turn out to be in the tenant’s favour under the Rent Control Act and a tricky situation for the landlord if the tenant does not move out.  Because, under this Act, tenants can claim ownership of the property after staying in the same premises for at least 10 years.  The landlord has no recourse to evict the tenant or even increase the rent if the rent agreement is registered.

For a longer tenure

It is not mandatory for a landlord to draft an 11-month rental agreement.  If tenants want a longer tenure, the landlord can extend the rental period provided the rental agreement is registered legally.  In fact, even an 11-month agreement can be renewed and extended on mutual agreement between the landlord and tenant.  A registered rental agreement prevents landlords from overcharging and gives tenants more rights, as it is governed by rent control laws.

Registration and stamp duty

As a tenant, if you’re seeking a longer tenure, then inform your landlord about the exact period so that the agreement can be drafted accordingly.  The parties then need to visit the sub-registrar office under whose jurisdiction the property falls, pay the stamp duty on the tenure of the lease, and register the lease document.  The registration of the rent agreement can also be done online.

          Stamp duty rates and laws vary across states in India.

Thanks - TIMES PROPERTY