A Lease Deed is a contract wherein the lessee (tenant) agrees to pay the lessor (landlord) periodic rent for the use of an immoveable property.
A lease deed is generally written whenever an owner gives his property on rent to a tenant. A lease agreement may be made in respect of a Shop, Office, Flat, Apartment, Builder Floor, Bungalow, Unit in a Commercial Tower or Mall, Industrial Site, farm houses, agricultural lands etc.
According to Section 105 of the Transfer of Property Act, 1872, a lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.
A lease of an immovable property from year to year, or for any term exceeding one year or reserving a yearly rent, can be made only by a registered instrument.
Therefore, it is compulsory to get a lease deed registered in the Sub Registrar Office if the lease is for a term of 1 year or more.
All other lease of an immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.
Where a lease of immovable property is made by a registered instrument, such instrument shall be executed by both the lessor and the lessee.
Important Clauses in a Lease Agreement:
Some of the common points that are to be considered while drafting a Lease Deed / Lease Agreement are as follows:
Description of the Parties to the lease
Term of the Lease
Monthly Rent payable
Date and mode by which the rent is payable
Purpose of lease whether for residential or commercial purpose
Security deposit and the interest to be paid on it, if any
Additional Facilities provided by the Lessor
Monthly maintenance charges and who bears it
Other charges such as tax and parking fee, and who pays them
Access to common terrace and common areas
Whether the lessee can sub-lease
Grounds for termination of the agreement
Fixtures and fittings provided by the lessor and their maintenance
Rent escalation clause specifying when the rent can be increased and at what rate
Who will bear the routine repair and maintenance expenses of the house - both minor and major repairs
In case the lease deed needs to be registered, distribution of the stamp duty and registration expenses
Notice period that needs to be given by either party to terminate the lease