The contract where one party permits the right to use the asset belongs to him to the other party for a certain period, is known as Leasing. Rent and Lease are used interchangeably in India. Section 17 of the Registration Act states that leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent must be registered compulsorily. Further, section 107 of the Transfer of Property Act states that a lease of immovable property from year to year or for any term exceeding one year or reserving a yearly rent can only be made by a registered instrument. All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession. Section 106 of the TOPA states that in the absence of a written contract or local law or usage to the contrary, a lease of immovable property (except for agricultural and manufacturing purpose) shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by 15 (fifteen) days’ notice. In case of commercial lease, in absence of a written agreement, it is presumed that it is from year to year, terminable, on the part of either Lesser or lessee, by six months’ notice expiring with the end of a year of the tenancy.

It is always better to get a lease deed/rent agreement in writing on a stamp paper, duly notarized before a Notary Public, entries be made in his register, duly witnessed by two healthy and young(wherever possible) local witnesses with their full identity and addresses while registering Lease agreements.

Since it is mandatory to register a written lease deed for over 12 months, people usually go for 11 months agreement to avoid registration hassles and fees but it is always better to have a registered lease deed, if the tenant intends to live longer than a year. A little more cost will help things go fairer albeit a properly written rent agreement is as good which is dully attested by witnesses and a notary, all being physically present at one spot.

Before registering Lease agreements both the landlord and the tenant should take into account some of the essential things such as:

1. The landlord should have complete information related to the identity and permanent address of the tenant and the vice versa.
2. Tenant should also know whether the leased property is subject to any mortgage for any loan. Also, tenant should know about how long the property is being rented, who will pay the electricity bill, water and house tax, whether it is included in the rent or not. If the property is subject to monthly maintenance that should be clearly stated as well.
3. In the rent agreement, it should be clearly mentioned when rent to be increased and by how much.
4. It is also very essential for a tenant to verify the true ownership of the property being leased. Unless duly authorized, only owner can lease a property.
5. Landlord should get police verification of the proposed tenant done from local police station at the earliest too.
6. Tenant should try to inquire about the property and landlord from neighbours, if possible before finally going for any agreement.
7. Tenant should physically inspect the proposed place, gas, electricity, sewer, security, lift, locality, age of building and amenities nearby. Ask for electricity bill and cross check with landlord’s id will make it easiest.
8. Ask any doubts/ queries one may have from both sides.
9. Be very clear about the termination of lease clause. How much time is required before any exit notice be served by either party be clearly mentioned.
10. Pay through cheque or draft, wherever possible.

Refer to this sample lease deed as to how ordinarily a lease deed is drafted:

Rent agreement format: Here is a sample for reference – Times of India