Rent and Agreements when a normal person listen to this they become afraid because of lack of knowledge and awareness, most of the peoples don’t even know what is rent agreement and what are the contains in it but they are into this agreement because of their needs for residence purposes or for commercial purposes.
Let’s start with what is a rent agreement?
Rent agreement is an agreement which is made by 2 parties namely one is tenant who utilize the property for his use and 2nd one is the owner he is the owner of the property and he gives his property on rent to the tenant for getting financial benefits. Rent Agreement contains the important terms and conditions between the party to the contract IE the duties of the tenants towards the said premises and also the liabilities of the same even there are few obligations for the owner of the premises which is mutually agreed by the owner as well as the tenant, Rent agreement also contains the financial liabilities of the tenants IE in term of Rent to be paid by him to the owner of the property on per month bases and also the security deposit given to the owner. All the terms and conditions are to be noted on the paper and this draft is called the “Rent Agreement”.
Now the question arises how to execute it? Expenses of the said execution:
It has been noted in maximum cases that the rent agreements are made and been executed for the period of 11 months, even if the both the parties are willing to go for long term lease they might get into for 11 months only. This situation is not compulsory but this can happen the reason is in each and every state there is a rent control act and also if the agreement is made for 1 year or above 1 year then they have to make agreements as a registered agreement which incurred stamp duties + other expenses and to avoid such expenses the owner and the tenant agrees to get into 11 months agreement which after the expiry of 11 months they will renew.
For an example if we consider a rent of Rs. 10,000/month agreement for 3 years and an increment clause of 5%PA is mention then the stamp duty will be Rs. 10,000*12 months = Rs. 1, 20,000 for 1st year then Rs. 10,500 * 12 Months = Rs. 126000 for 2nd year and Rs. 11,025*12 months = Rs.1,32,300 total of 3 years will be Rs.3,78,300 and average per year rent is Rs. 3,78,300/3 which comes to Rs 1,26,100 and the stamp duty will be paid on Rs.1,26,100 and it will be 2% of its which comes to Rs. 2,522, But if they go for 11 months agreement the same will come down to Rs. 100 Bond paper + Rs. 100 to Rs. 500 for doing notary and the document will be executed.
Thus to save the additional expenses the tenant and the owner mutually agree to make 11 month Rent Agreements.
Blog by,
Madhur Agrawal,
Youtube channel link : www.youtube.com/Tradeusonline
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