Most leases are signed for 11 months to avoid stamp duty and other fees. Under the Registration Act 1908, registration of a lease is mandatory if the term of the lease is longer than 12 months. When a contract is registered, stamp duty and registration fees must be paid for it. For example, in Delhi, the cost of buffer paper for a lease of up to five years is 2% of the total average annual rent of one year. Add a fixed fee of Rs100 if a deposit is part of the deal. For a lease of more than 5 years, but less than 10 years, it represents 3% of the value of the average annual rent of a year. For 10 years and more, but less than 20 years, this is 6% of the value of the average annual rent of a year. The stamp paper can be in the name of the tenant or landlord. In addition, a fixed registration fee of Rs 1,100 is also payable via Demand Draft (DD).
As already mentioned, a lease sets the number of clauses such as the description of the property, the amount of rent, the deposit and so on. It shall also mention the circumstances in which the contract may be terminated. It can be said that a contract originally concluded to protect the interests of both parties can also be used as evidence in the subsequent dispute. We`re here to help you create a legally valid lease. All you have to do is register on our website, search for leases and fill in the necessary details. There you go! You have a rental agreement. In addition, our services also extend to offer you a multitude of legal documents adapted to your needs. Our website is easy to use, convenient and will certainly prove to be very efficient and fast. So stop waiting in your lawyer`s office and just look for LegalDesk.com! According to section 17 of the Registration Act 1908, leases of more than one year must be registered with the local authorities. As a result, both parties pay stamp duty and registration fees. As a rule, it is the tenant who must pay the additional rental fees. When a property is rented for 24 months at a monthly rent of Rs20,000 for the first 12 months and Rs22,000 per month for the following 12 months.
The registration fee for this agreement would be: 2% of the average rent for 12 months: Rs5,040, (average monthly rent is rs 21,000, average annual rent is 21000 * 12 and 2% is Rs5,040). „From a monetary point of view, it would be costly for a tenant if leases were established for a period of more than 11 months. From a legal point of view, it would be quite cumbersome for the owner,“ Mishra adds. Leases entered into under the provisions of the Indian Easements Act, 1882 as vacation and licence agreements for a period of 11 months are not valid under the Rent Control Acts. Rent control laws, which vary from state to state, have all leases entered into for a period of at least one year in their jurisdiction. These archaic laws, widely implemented around the world after World War II, set out strict rules that make renting difficult, especially for the owner. Landlords who rent their premises under these laws will have great difficulty revising rents and evicting tenants. To avoid such high fees, tenants and landlords mutually agree that the contract will not be registered. Therefore, most leases are signed for a period of 11 months.
In addition, the creation of an 11-month lease gives the landlord the flexibility to determine rent as a prevailing market scenario. Here are the consequences you`ll face if the lease is extended by more than 11 months: Have you ever wondered why your landlord wants you to sign an 11-month lease? Why 11 months finally, why not do it just for the year? What`s the big problem, it`s only a matter of months, right? In this particular case, the court also held that even if the unreg registered agreement cannot be used as evidence in court, it can still be used as confirmatory (or supporting) evidence of the existence of a previous agreement. .