Lease deed: All you need to know

[ecis2016.org] We examine what constitutes a lease deed, how to draft one and the legal aspects pertaining to its registration

If a property is being used by some other person, apart from the actual owner, the property is said to be rented out or leased out. To formalise this arrangement, a rental agreement, known as the lease deed, is entered into.

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What is a lease deed?

A lease deed is a document or a written contract between the property owner or a landlord also known as lessor and the tenant or lessee, which contains all the terms and conditions, including the rent to be paid, security deposit to be made, etc. A lease deed is usually required, when the property is rented out for a long period of time. A deed has to be registered, if the lease period is for more than 11 months.

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What are the contents of the lease deed?

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Here are some of the important provisions and details that should be listed in a lease deed:

1. Property details, including area, location, address, structure, furniture and furnishings, if provided are mentioned in the lease deed.
2. Lease duration, its validity and provision for its renewal, along with the terms and conditions for renewal of lease deed.
3. Rent, maintenance, security deposit to be paid by the tenant and the due date. Other important provisions, such as interest and penalty on payment delay, should also be mentioned. It should also mention the details of payment to be made by the tenant on a monthly basis, such as electricity charges, water bills or any other utility costs.
4. Clauses for lease termination should be mentioned in the lease deed, along with other reasons for which the agreement can be cancelled, such as breach of deed, use of property for illegal activities, or failure to pay rent.

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Difference between lease deed and lease agreement

An agreement to lease generally covers the broad aspects of the lease, such as the duration, the rent payable, the rights of renewal of the lease, etc., while a lease deed also includes detail about the day-to-day operations of the lease.

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Documents required for lease agreement registration

The registration of a lease agreement is vital as it protects the landlords and tenants against any disputes in the future. One can register a rent agreement by approaching the sub-registrar’s office. One should note that the registration should be done at least four months before the date of deed expiration. After that, a fresh lease deed must be created.

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The following documents are required for lease deed registration:

• Identity proof, such as Aadhaar Card, driving licence, passport, etc., of the landlord and tenant.
• Address proof of the authorised signatory, from both the parties.
• Passport-sized colour photographs of the authorised signatory, from both the parties.
• Company PAN card and company seal/stamp, if it is a commercial property.
• The original proof/evidence of ownership or title of the property.
• Property documents, such as Index II or tax receipt of the property to be leased.
• Route map of the property leased out.

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Is lease deed registration mandatory?

According to the Registration Act, 1908, any property being leased for residential, commercial, cultivation, hereditary allowances, or fisheries purpose, should be registered, if they are being leased out for more than 11 months. The law is applicable to all states, (except Jammu and Kashmir). A lease dead that lasts only for 11 months does not require registration.

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Why lease deeds are for 99 years?

When the development authority allots development rights of the land to the builder, it is usually for a lease of 99 years. This implies that anyone who gets a leasehold land, will own it for 99 years, after which the ownership is given back to the landowner. The long-term leases control the transfer of land and its uses. This time span is seen as a safe interval choice, given that it will cover the lifespan of the lessee and will safeguard the ownership of the lessor.

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