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Perfection Consulting India provides assistance in drafting your Lease Deed online, eliminating the need for physical office visits. Our team has successfully drafted over 2000 Lease Agreements to date.
Per Section 105 of the Transfer of Property Act, a lease means transferring to a person the right to enjoy property, land, or an estate for a certain period or perpetually. An amount by any means agreed to be paid or payable from the lessee to the lessor from time to time or on certain occasions as consideration involves either money or a share of commodities, service, or any other valuable consideration. The understanding of a lease thus depends on an understanding of the following terms:
- Lessor: The property owner who grants the lease and retains complete authority over the property.
- Lessee: The individual who receives rights to use and possession of the property as per the lease agreement.
- Duration: The period for which the lessee is entitled to the rights of the property.
- Premium or Rent: The amount or share paid for the right to use and enjoy the property either periodically or lump sum as per the agreement.
A lease agreement is an official document between a lessor (landlord) and a lessee (tenant) in which the lessor consents to receiving periodic payments from the tenant in exchange for the right to use and occupy the property. Lease agreements are most frequently mandatory where property is let out for not less than 1-5 years or depending on the state laws. Such agreements thereby equip the relationship between the landlord and tenant with the legal bindings upon both parties. Drafting this lease deed should be done by an expert documentation lawyer to meet all the requirements of both parties while ensuring that the interests of the landlord and tenant are equally balanced.
Difference between Lease and Sale
Lease
- The tenant has only the rights to use the property.
- Except in cases when the lease is perpetual, the rights of the lessee to the property cease with the termination of the lease.
- The payments are made either at intervals or as a premium.
- A lessee can use the property, and more often transfer the lease; but ownership remains with the lessor.
- Generally, leasing is less expensive.
- The lessee does not receive the remaining value of the property.
- Lease documents are called lease agreements or deeds of lease.
Sale
- The buyer gets all the rights of ownership to the property.
- There are no restrictions regarding the use of the property.
- The price of the property is paid all in one shot.
- The building allows the buyer to resell it later on.
- The cost is high compared to the lease rent that would be paid for the same property.
- The value retained in the property could be passed on to the buyer.
- Usually sales are accompanied by an agreement of sale, deed of conveyance or sale deed.
Critical Components of Lease Deed in India
There are certain mandatory clauses that must be included in every lease agreement in India:
- Description of Property: The deed should be more descriptive as to the property area and location, structure, address, and other relevant information.
- Duration: The lease agreement should contain a statement of the period or duration for which the lease is valid. This provision may also include information about the renewal of the lease deed if the parties wish to continue the contract.
- Rent, Maintenance, and Security: The lease deed must specify the amount of rent, payment mode, due dates, security deposits, interest for late payments, as well as about maintenance charges, society charges, and utility bills.
- Termination of Lease: The deed must specify the causes for terminating the agreement, such as breach of deed, illegal activities on the property, non-payment of rent or nuisance by the lessee.
- Subletting: The lease deed must specify whether or not subletting the property is allowed by the tenant.
- Dispute Resolution: The deed should state the methods for handling of legal disputes arising from the breach of the agreement such as ADR processes utilizing arbitration as well.
- Applicable Laws: This clause should mention the applicable laws in case of disputes between both parties and the court which would have jurisdiction over such cases.
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Receive a Call from Our Expert Legal Team
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Provide Necessary Information to the Lawyer
04
Our Expert Legal Team Drafts the Deed
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Deed Sent to You for Approval
06
Download the Approved Deed
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Frequently Asked Questions (FAQs)
A lease deed is when the tenant has agreed to pay a regular rent to the landlord through an agreement with the landlord.
In case of a lease for more than 12 months, registration of such lease agreements is compulsory under the Registration Act, 1908. If an agreement is registered, stamp duty and registration fee shall apply.
Although the term rent and lease are synonymous in nature renting a property is not akin to leasing a property. A rent agreement can either be a lease or a license. It will be treated as per the terms and conditions and renting period mentioned in the agreement.