The Rental Housing Association of India (RHAI) recently recommended the Ministry of Housing give 'Infrastructure' status to the rental housing industry. The body has suggested setting up an online portal for all rental housing properties to facilitate mandatory online registration.
A lease or rental agreement sets out the rules Lessor and Lessee agree to follow in their Lease relationship. It is a legal contract and an immensely practical document full of crucial business details, such as how long the tenant can occupy the property and the amount of rent due each month. The lease agreement needs to cover the tenancy’s basic terms irrespective of whether it is handwritten or typed form.
- Names of all tenants: Every adult who lives in the rental unit, including both members of a married or unmarried couple, should be named Lessees and sign the Lease Agreement. This makes each Lessee legally responsible for all terms, including the full amount of the Lease and the proper use of the property. This means that the Lessor can legally seek the entire rent from any of the Lessees if the others skip out or are unable to pay, and if one tenant violates an important term of the tenancy owner can terminate the tenancy for all tenants on that rental agreement.
- Occupancy limits: The agreement should specify that the rental unit can be occupied only by the Lessees who have signed the Lease and their minor children. This guarantees the Lessor’s right to determine the property’s possession. The value of this clause is that it sets out the grounds to evict a tenant who moves in with a friend or relative or sublets the unit without the permission of the owner of the property.
- Term of the tenancy: Every rental document should state whether it is a rental agreement or a fixed-term lease. Rental agreements usually run from month to month and self-renew unless terminated by the landlord or tenant. Leases, on the other hand, typically last a year. The owner decides to make the agreement flexible by not mentioning the specific period.
- Rent: The lease Agreement should specify the amount of rent, when it is due (typically, the first of the month), and how it’s to be paid, such as by mail to the office of the property owner. To avoid confusion and disputes:
- acceptable payment methods (such as personal cheque only)
- Whether late fees will be due if rent is not paid on time, the amount of the fee and whether there is any grace period, and
- Any charges if a rent cheque bounces.
5. Deposits and fees: The use and return of security deposits is a frequent friction between Lessor and Lessee. To avoid confusion and legal difficulties, the Lease Agreement should be clear on the limit, use and return of deposits, including:
- The dollar amount of the security deposit (must comply with the respective state laws for setting up maximum amounts)
- How the Lessor utilises the deposit (Eg: for damage repair) and the activities prohibited for the tenant (such as applying it to last month’s rent)
- The time and mode of return of the deposit and account for deductions after the tenant moves out, and
- Any legal non-returnable fees, such as for cleaning or pets.
It’s also a good idea (and legally required in a few states and cities) to include details on where the security deposit is being held and whether interest on the security deposit will be paid to the tenant.
6. Repairs and maintenance: Set out the responsibilities of both the Lessee and the Lessor for repair and maintenance in the Lease agreement, including:
- the Lessee’s responsibility to keep the premises of the leased property clean and sanitary and to pay for any damage caused by their abuse or neglect
- Specific details on the procedures to handle the complaint and repair requests, and
- Restrictions on lessee repairs and alterations, such as adding a built-in dishwasher, installing a burglar alarm system, or painting walls without the permission of the owner of the property.
7. Entry to the Lease property: To avoid the Lessee’s claims of illegal entry or violation of privacy rights, the Lease Agreement should clarify the legal rights of the Lessor to access the property.
8. Restrictions on tenant’s illegal activity: To avoid the trouble of the Lessee, to prevent damage to the property and to limit the exposure to lawsuits from residents and neighbours, the Lease Agreement should contain a clause prohibiting disruptive behaviour, such as excessive noise, and illegal activities like drug dealing.
9. Pets: The lease Agreement should be clear on this subject. If the Lessor allows pets, the agreement should identify any special restrictions, such as a limit on the size or number of pets or a requirement that the Lessee will keep the yard free of all animal waste.
10. Other Restrictions:
Depending on your property, the following lease agreement terms may be useful to include in your lease agreement:
- Right to renew the Lease – if the tenant has the right to renew the Lease at the end of the lease agreement, those terms should be listed in the lease agreement. Ideally, a new lease agreement will be signed each time the tenant renews.
- Right to sublet the space – if the tenant has the right to sublet the property to another person, the lease agreement should spell out those terms.
- Parking restrictions/rules – if the property has parking or offers parking in a designated spot, those terms should be listed in the lease agreement.
- Possessions – if certain possessions, like water beds or grills, are not allowed on the property, those terms should be listed – along with the consequences if those items cause damage to the property.
- Property rules – if the property is a multi-unit, the landlord may specify rules that govern behaviour on the property, such as avoiding loud noises after 10 p.m. or not doing vehicle repairs in the parking lot, for example.
Many essential and optional lease terms are included in pre-printed, standardised lease forms. Still, these terms may or may not meet your needs as a property owner. In addition, it is essential to note that standardised agreements only sometimes fit the situation. In addition, they may or may not be customised to meet the requirements of your state or local government.
Don’t hesitate to contact our team for more information regarding your concern.
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