If you have ever put a property on rent or have lived in a rented house, you must have signed a rent agreement .Have you ever wondered why most rent agreements are for a duration of 11 months? Often, neither landlords nor tenants and not even the real estate agents know why this is so. Let’s find out.
Also known as a lease agreement, the rent agreement is a written contract between the owner of the property (the landlord) and the tenant who takes it on rent. The agreement specifies the terms and conditions based on which the property (address, type and size), monthly rent, security deposit, purpose for which property can be used (residential or commercial), and duration of the agreement. Its terms and conditions can be negotiated but after it is signed, it is binding on both the landlord and tenant. It also specifies the conditions under which the agreement can be terminated.
Most rent agreements are signed for 11 months so that they can avoid stamp duty and other charges. No need to register if tenancy is less that a year. As per the requirements of section 17 of the Registration Act, 1908, a lease agreement for a term not exceeding one year is not compulsorily registrable. This means that rent agreements for less than 12 months duration can be made without registration. “The said option enables the parties to avoid the arduous process of getting the document registered before the office of the sub-registrar and making payment of the registration charges,” says Niraj Kumar, partner, DSK Legal.
In order to avoid legal trouble, landlords prefer the 11 month tenancy. “In a lease where tenure is for a longer duration, often terms such as rent, tenant and tenure are used which invokes the possibility of tenancy by the other party under rent control laws which are tenant-friendly. This can eventually lead to protracted court battle in case of a dispute,” says Soumee Bhatt, General Counsel, BankBazaar.com.
