Lease deed pertains to the leasing and renting of a property, whereby the terms and conditions of the renting of the property are enumerated. It acts as the module for the rule of conduct, including restriction if any and adherence to certain conditions if any by the lessee and lessor for the property to be leased out. A pre-expressed lease deed has to be clearly formulated and should be free from ambiguity in order to maintain the cordial relationship between the lessor and lessee.
What is meant by the term Lease?
The definition of ‘Lease’ refers to the transfer of a right to enjoy the property for a defined period of time or could be in perpetuity. The consideration for a price paid or promised or of money, service or any other thing which is of value and that is rendered periodically or such specific occasion to the lessor by the Lessee
Lessor: In a lease deed the lessor refers to the owner having absolute right on the property which is the subject to the matter of the lease.
Lessee: In a lease deed the lessor refers to the person acquiring the rights to use and enjoy the property on lease from the Lessor which is the subject matter of the lease;
Premium or Rent: It is the Premium or on payment of money or any other thing of value, periodically or on specific occasions or intervals, known as Rent.
What should all things be there in a well-drafted Lease deed?
- Parties: Parties to the agreement: The details of Lessor and lessee, stating their name and address.
- Date: Date of execution of lease deed.
- Property details: Property description.
- Renewable: Renewal time that is after what duration or period the deed is required to be renewed.
- Encumbrance: Any encumbrance details, if any.
- Consideration: Consideration to be paid, at what time it shall be paid, any increment applicable to it after the specified period of time.
- Duties or liabilities: Any other liability to be incurred by the lessee during his /her stay in the rented premise such as taxes, cess, and such other municipal taxes if any.
- Terms and conditions: Clear instructions regarding restriction if any from the lessor side, say regarding subletting, selling, purchasing, assigning, which is required to be obliged by the lessee such other condition say keeping the building constructed on the demised premises in good and tenantable condition.
- Duration: The duration for which the deed is to be executed that is the start and end or the renewal as the case may be, it could be expressed or implied or can also be in perpetuity.
- Deposit: A lump sum amount apart from the periodically amount taken, is demanded by the owner called as a deposit, which is of returnable nature at the time of the end of the lease deed and could be subject to certain deductions in case of any violation to the terms of the deed. However, everything must be pre-informed and consent is to be taken in writing. Usually, this particular thing is taken care in the lease deed itself.
Execution stages for Lease Deed:
Following are the stages:
- Primary Stage: Once the Lease deed is formulated the duration of the lease, consideration, mode of payment should be clearly discussed and negotiated.
- Documentation Stage: The Memorandum of Understanding (MOU) shall be formulated with regard to the commercial aspects, duties and other related obligations of the respective parties. Basically, the intention of the parties is taken to the next stage of the process.
- Basic Due Diligence Stage: The draft should be properly read by the lessee and in case of any confusion, it should be clarified then and there, and the property details should be checked and verified such as title clearance, property paper.
- Drafting, Notarisation, registration Stage: Once the Requisite money deposit, consideration amount is paid off take the possession of the property. The deed should be signed and dated by lessor and lessee and by the witnesses to the execution of the Lease Deed. Once the instrument has been executed it should be notarised on the stamp paper and can be put up for registration at the Office of the applicable Sub-Registrar of Assurances having suitable jurisdiction over the property.
- Post Registration Stage: After the possession has been taking n over by the Lessee, the lessee must inform about the same to various governmental and semi-governmental bodies having jurisdiction over the concerned property in writing about the change of holder.
Legal Aspect of registration:
According to the Section 107 of the transfer of property Act, 1882 and pursuant to section sub-clause 1(d) of section 19 of the Transfer of Property Act, 1882 and Section 19 (1) (d) of the India Registration Act, 1908 respectively it is mandatory to register the lease of an immovable property for a term exceeding one year or in such as a system of yearly payment of rent. . In case a lease deed is not registered then it should be mandatorily registered otherwise the deed shall be treated as void.
What we do:
- We shall draft the lease deed for you.
- We also provide pre and post-registration services.
- Any other assistance on demand.
In case you wish to have a lease deed, kindly contact the expert team of LawyerInc.
