When it comes to renting a residential property, the onus is on both landlords as well as tenants to protect their interests, especially when you consider the prevalence of shady practices involving rental agreements. While almost all lease agreements contain clauses that safeguard the landlord’s interests, experts believe it’s time tenants become more proactive and protect themselves too. Yet, considering the relative dearth of bargaining power they possess when it comes to signing rental agreements, it can be challenging for the tenants themselves to negotiate better contract terms.
However, to help tenants avoid being taken for granted, here is a quick guide on what clauses they should keep an eye out for to safeguard their rights and secure their interests:
Security deposit:
The landlord collects a security deposit from tenants before leasing out ordinarily. This amount covers any property damage incurred during the lease period and also acts as a security against non-payment of rent. While landlords typically mention the security deposit amount in the rental agreement, tenants should bear in mind several salient points before handing over the sum.
For instance, lessees must check if there are any conditions under which the security deposit can be withheld, along with the timeline within which the deposit will be returned on lease termination. Such additional clauses within the lease agreement ensure that landlords can’t unilaterally withhold the security deposit from their tenants.
According to Mitali Naik, Partner of DSK Legal, “The lease agreement should clearly state the amount to be withheld from the security deposit to pay off any pending utility bills or cover damage to the property’s fittings and furniture. It should also mention the holding duration of the deposit to eliminate any rent-deposit-related disputes.”
Lock-in period and termination of lease agreement:
The lease deed must offer both the landlords and tenants sufficient time to terminate the contract. The tenant can then hash out the notice period with the other party based on their requirements. Similarly, the lease agreement must stipulate a uniform lock-in period that applies to both parties, i.e., the landlord and tenant. Neither party should be able to terminate the lease agreement during this lock-in period.
Natural wear-and-tear:
The rental agreement should clearly state what damage or losses are applicable to the tenant’s liability. If not specified, renters can end up paying for normal wear-and-tear of utilities or fixtures, so to avoid such disputes, a clause must be included which specifies that the tenant shall only be liable for substantial loss or damage.
List of utilities and fixtures:
An annexure to the lease agreement containing a comprehensive list of utilities and fixtures, along with photographs, is always advisable. Verification of all electronic appliances’ functioning at the property must be done by the tenant before signing the rental agreement. These steps eliminate conflicts concerning fixtures and appliances at a later stage. For instance, the landlord may argue that the geysers were installed in two bathrooms, whereas only one was, at the time of renting.
According to Nitin Jain, Partner of Agama Law Associates, “Mentioning the specifics of amenities, including furniture and fixtures, in the rental agreement is critical. The landlord’s electronic devices must function correctly at all times. An extensive annexure containing a list of these assets should be included in the agreement. A video showing these details is also a must to avoid any claims for damage or depreciation leading to deductions from the security deposit later on.”
No pending municipal or societal dues:
The rent agreement must clarify that there are no unpaid municipal or societal dues that should arise at the moment of handing over the rental property. If such unpaid dues exist, the clause should specify that the landlord will bear the responsibility for paying these dues, including any that relate to unpaid utility bills, electricity, and water.
Dispute resolution:
The rent agreement should outline the mechanism available for resolving disputes if they arise. Given that this involves both the tenant and landlord, it is crucial that the clause specifies the location for such an adjudication. This is necessary to ensure the convenience of both parties.
Renewal and increase in rent:
While renewing the rent contract, the agreement must specify the appropriate process and outline the associated increase in the next lease term. For failing to address this clause, landlords may tend to hike rents arbitrarily, leading to tenants being exploited.
Cost of making rent agreement:
Registration charges, notarization fees, affidavit costs, etc., are all expenses that a tenant has to bear when a lease agreement is made. It must be made clear beforehand as part of the agreement who will cover the brokerage of agents, stamp duty, registration charges, etc.
Use and occupation:
The rental agreement must provide details about the purpose, usage, and occupation of the rented property. Mitali Naik says, “The tenant must ensure all the necessary permissions and sanctions required for their particular use as specified in the agreement are obtained before renting. The tenant can then use the premises in line with the permissions and approvals provided by the respective authorities, as in the case of renting a residential property, which cannot be used for commercial purposes.”
No extra amount payable:
The tenant must ensure that all other payments that need to be made besides the rent are clearly mentioned in the agreement. In case the tenant only needs to pay rent and the charges for utilities, then the agreement should specify that all other expenses will be borne by the landlord.
Maintenance and repairs: The lease agreement should clearly specify the responsibility for maintenance and repairs. This can include regular maintenance tasks such as plumbing, electrical, and other repairs. It should also mention the process and timeline for reporting and addressing maintenance issues.
Notice period for entry: The landlord should not have unrestricted access to the rental property. The lease agreement should state that the landlord must provide advance notice before entering the property, except in cases of emergency.
Subletting and guests: The lease agreement should address whether the tenant is allowed to sublet the property or have overnight guests. If there are any restrictions or conditions, they should be clearly stated.
Renewal and termination: The terms for lease renewal or termination should be clearly outlined in the agreement. This can include the notice period required by both parties and any conditions for renewal or termination.
Rent increase: The lease agreement should specify the terms for any rent increases. It should outline when and how rent can be increased, the notice period for such increases, and any limits or restrictions on the amount of the increase.
Early termination: In case the tenant needs to terminate the lease before the agreed-upon term, the lease agreement should specify the conditions, penalties, and process for early termination.
Pets: If the tenant has pets or wishes to get a pet during the lease term, the lease agreement should clearly state whether pets are allowed, any restrictions or additional fees related to pets, and the tenant’s responsibilities in terms of pet care and damage caused by pets.
Right to privacy: The agreement should include a clause that guarantees the tenant’s right to privacy and prevents the landlord from invading their privacy without proper cause.
Arbitration clause: Including an arbitration clause can be beneficial in case of any disputes that arise during the lease term. It can provide a quicker and more cost-effective alternative to going to court.
It’s important for tenants to carefully review their lease agreement and negotiate these clauses with the landlord to ensure a fair and secure rental experience.
Conclusion:
As a tenant looking to safeguard your rights and ensure a secure lease, it is crucial to proactively evaluate and enhance the existing lease agreement before renting any property. Checking and negotiating the terms, keeping an eye out for all the essential clauses mentioned above, may not only help you avoid misunderstandings and disputes with the landlord, but also protect your rights for a secure and peaceful stay. Moreover, by making the rental agreement more SEO-friendly, it can become an invaluable guide for anyone looking to lease a house or apartment in India. Therefore, if you’re renting out a place soon, make sure to check out these clauses to avoid getting cheated and ensure a hassle-free stay.
Disclaimer:
Estabizz Fintech compiled the material in this article using the most recent Acts, Rules, Circulars, Notifications, Provisions, Press Releases, and material applicable at the time. They ensured the completeness and correctness of the material through due diligence. When using this material, users must consult the relevant, applicable legislation. The given data may change without prior notice and does not constitute professional advice. Estabizz Fintech disclaims all liability for any results from the use of this material.
