Those having a couple of or a number of residential property normally get prompted to lease out their property. Apart from tax advantages, renting out a home has a number of different benefits like getting further revenue, and so on. However, giving a home on lease isn’t a simple process and normally comes with its justifiable share of duties and challenges.
Therefore, whereas giving residential property on lease / go away and license foundation, it will be important for the proprietor/lessor to think about some essential issues for the aim of safeguarding their very own rights. Here we check out a few of them:
1) As the proprietor of residential property, one needs to be cautious in regards to the profile of the tenant and his/her skill to pay the lease on time, and therefore KYC of the incoming tenant/licensee is a should. So, initially, one ought to have a look at the profile of the tenant. “There are several cases where the tenant does not pay the rent on one hand and does not vacate the property on the other hand. The judicial process is slow and, in such a situation, the tenant takes advantage. It is also extremely important to get the police verification of the tenant/licensee done,” says Sadhawa Mishra, Partner, SNG & Partners.
2) There are companies like Karza Technology, Cubic Tree and so on which may give a report at a miniscule value on the problems like several pending default or litigation of an individual. So, such stories ought to be obtained to do the again floor examine and to make sure that the potential tenant isn’t a litigation profile or a defaulter.
3) The lease / go away and license settlement should be executed in writing duly signed by each the events and attested by two witnesses to make it legitimate and legally enforceable. “The lease/ leave and license agreement should interalia include the important terms such as rent / license fee; duration; date of vacation; security deposit; no subletting rights; certain important dos and don’ts, etc. There should be adequate protective clauses under the agreement giving rights to the owner to terminate the agreement and thereby seeking vacation of the property in the event of default by the licensee/lessee which interalia could be non-payment of the rent/license fees etc., default by the lessee/licensee of the terms of the agreement,” informs Mishra.
4) The lease / go away and license doc should be adequately stamped even when for a number of months. If the period of association is greater than 11 months, this doc should be registered additionally with the sub registrar of assurances. If the stamp obligation isn’t paid and the doc isn’t registered, it can’t be relied earlier than the courtroom of regulation and creates authorized issues, which makes it tough for the proprietor to implement the settlement.
5) It is advisable {that a} month-to-month or quarterly go to ought to be made to the tenanted property to make sure that the property is being managed properly and that the property is getting used just for the permitted utilization and for no different function. For instance, if the leased/licensed property is residential in nature, it ought for use for residential functions solely.
6) Regular updates ought to be taken from the society that the tenant / licensee is paying the upkeep / water and electrical fees the place the tenant / licensee is required to pay the identical relying upon the business understanding/phrases underneath the settlement. “In the event the licensee/tenant fails to do so, then the owner/licensor should have adequate right to terminate the agreement and necessary clauses to be incorporated in the agreement to that effect,” suggests Mishra.
7) Penalty / mesne revenue clause ought to be constructed recording that if the property isn’t vacated on the agreed date, liquidated damages will likely be levied, which is able to deter the tenant / licensee from committing breach. Additionally, safety deposit forfeiture clause all must be integrated.
Source: www.financialexpress.com”