Have you ever wondered about the legalities associated with stamp duty and lease agreements? If yes, you can gain more information about them in this article
Lease Agreements: Before proceeding further, let me first explain the term “Legal”, which can be defined as anything relating to the law or the rules that must be followed. As we live in a society where everything is defined by statute, stamp duty must be paid for the lease agreement to provide the legalities for the document.
There are times when owning a house/shop is not possible at a specific location due to financial challenges or job posting; in that case, people prefer to go for rental solutions. Moreover, you must register the rental agreement and stamp duty by remunerating the mandatory charges to provide the authority for renting or leasing the property. Unlike rent and lease are entirely different terms, both require a stamp duty fee.
Why Is A Lease Agreement Required?
A lease agreement is vital in maintaining and strengthening the relationship between two (Landlord-Tenant) parties by protecting their rights or authority. For the implementation of any Lease Agreements and Stamp Duty fee is required to be paid under the applicable stamp law of the state in India.
Stamp duty is paid depending upon the tenure of the lease, the rental premiums, or any other form of rent for personal or commercial stated in the lease agreement.
Whenever a residential property or assets are there for rental lease, the property owner may ask you to provide a document that can deal with legal protection proposals for future differences—a lease agreement act as proof regarding legal issues. An officially obligatory rental agreement is required to be fulfilled by both parties to avoid further discrepancy.
Before signing the lease agreement, always make sure to check the following checkpoints:-
- Details of the property being leased, along with location, area, and arrangement, i.e. furnished or unfurnished, must be mentioned in the agreement.
- Duration for the lease, validity, and procedures for the renewal has to be specified in the lease.
- Certain clauses for nullifying the agreement and maintenance of the property, must be clarified in detail.
- Mentioning the timeline for the payment of rent, security deposit, and maintenance, including various amenities like water bills, utility bills, and electricity charges.
- In the case of commercial property company seal and PAN Card is required per the guidelines provided by the Government of India.
- Always clarify doubts about the conditions provided by the owners before signing the agreement.
- The lease deed is mandatory to be registered for 11 months.
- In the case of multiple tenants responsible for one lease, then the owner can impose a lease against all the tenants.
- As a written lease agreement is accepted, always prefer the written one.
- Due to complex business models or commercials, an oral agreement is not allowed in certain states.
- Once your agreement is signed, no further changes in the terms can be made.
What is Stamp Duty?
You can also address stamp duty as tax similar to income tax, to be paid under section 3 of the Indian Stamp act 1989. Though the Lease Agreements and Stamp Duty fee is required to be paid as mentioned on the lease agreement, you may need to pay up to ten times the initial stamp amount as a penalty if not paid on time.
So moreover, the stamp duty fee acts as proof of ownership in court in case of any issues or challenges for both parties.
Whether you are leasing a property or buying a new house, the stamp duty fee must be paid as regulated by the state government. Stamp duty is produced by the purchaser or the tenant of the property; in case of an exchange of property, both parties must pay the stamp duty fee.
Things to Remember
- The valuation officer might recall the document if there is a lack of essential information.
- Stamp duty is required to be paid for all real estate, excluding will.
- Stamp duty for transferring the applicant’s property has to be paid per the property’s current market condition and valuation.
- Documents must be submitted for the stamp duty, including certificates for sale, deeds, mortgage deed lease agreements, and many more.
- To complete the process for the stamp duty, details like house location, the year of the building, and the number of floors are required.
Although a Lease agreement and stamp duty are required for every property right, whether owned or rented, the contract always has pros and cons. As the rental agreement or the lease acts as the property owner for the mentioned time, the owner cannot ask you to move out before the period.
In case of stability, long-term tenancy can help you overcome the hassle of the property. The only challenge or cons of the lease agreement is that your monthly rent is fixed for a certain period. You need to fulfill all the mandatory obligations if you move before the mentioned period.
All you can say is Lease agreement plays a vital role in protecting the rights of both parties. No deal is to be accepted with stamp duty, so you always need to make sure to pay the amount for the stamp duty as specified by the norms.
So next time, if you are buying the property and renting a place on the lease, always check the points before signing the lease agreement. And do not forget to pay the stamp duty and registration fees if you buy the property—a great way to lead your life on legal terms.
Conclusion
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