Publication: The Times Of India Kochi;Date: Mar 25, 2013;Section: Personal Finance;Page: 12

Before you sign a rent agreement

The document should specify the charges that have to be paid by
the tenant and the facilities offered to him
AMIT SHANBAUG

When Kshitij Nadekar finalised the house he wanted to rent in Pune a year ago, he thought he would stay there for 2-3 years
till he bought his own house. He had agreed to pay a monthly rent of 5,000 and furnished 50,000 as deposit money.
However, six months later, the landlord wanted to increase the rent by 500 as the rentals in the area had gone up. My
landlord told me that such an increase was the norm, and since nothing was mentioned in the lease agreement, I had little
option but to pay the additional money, he adds.
Nadekar could have avoided this hassle if he had scrutinised the rent agreement carefully and made changes that could have
served his interests better. However, most tenants are not even aware of the points that should be included in the rent
agreement. Here are the things you should check while sifting through the contract.
Is the lessor the actual owner?
Before you sign the agreement, be sure that the person you are transacting with is the actual owner of the property. Often, NRIs
or investors hand over their property to caretakers, who may lease it to a third party without the knowledge of the owner.
So, you should verify the title documents, such as the sale deed and share certificate, besides obtaining a no-objection
certificate (NOC) from the housing society where you want to lease the property. If the apartment is mortgaged, the original
sale deed will be in the custody of the bank. In such a case, an NOC should be obtained from the bank. This will mention the
rightful owners name, advises Om Ahuja, chief executive officer, residential services, Jones Lang LaSalle India. Shveta Jain,
executive director, residential services, Cushman & Wakefield, says that tenants should be wary of arbitrary eviction if they deal
with an unsolicited party. A case of trespassing can be filed against such a tenant if he refuses to vacate within a given time
frame. The tenant cannot challenge eviction in this case, she adds.
What does the rent agreement contain?
A rent agreement includes the terms and conditions under which the property is given on rent. It specifies the rent value and the
tenure for which the agreement is made, as well as the security amount that needs to be deposited with the landlord by the
tenant. The agreement should also clearly mention the day before which the rent is expected to be paid. If the tenant fails to
pay the rent before the predetermined period, the penal charges that he would be liable to pay should also be defined in the
agreement. The rent agreement could also mention the facilities, such as parking space or the usage of societys gym, included
with the property. There could also be additional monthly charges, such as the society maintenance charge and club fee. Its
best if the additional charges for using such facilities are clearly spelt out, along with the person who is supposed to bear them.
The tenure of a rent agreement is usually 11 months, unless otherwise specified in the contract. If its for more
than a year, its mandatory for the owner to get the document registered.
The agreement should also specify the notice period and penalty for cancelling the agreement without completing
the specified period. Typically, a twomonth notice is served in case of high rental properties, while one months notice is
sufficient for low rental ones.
What should you check?

A tenant should verify whether the owner has included a rent escalation clause in the lease agreement, which could be used to
increase the rent after a couple of months. The best way to safeguard yourself is to ensure that the agreement specifies the
dates on which the rent escalation will be applicable and the percentage of increase, says Ahuja.
You should also make sure that there is a clause on the sale of the house. If the owner decides to sell the house during the
term of the rent agreement, you should know how many months you get to search for another accommodation.
Its also important to check that all the appliances and the connections in the house are working properly before you sign the
agreement. Usually, minor repair work for installed electrical appliances is the responsibility of the tenant and he has to pay for
them. However, if the property is damaged because of negligence on your part, the landlord can rightfully use the security
money deposited with him for carrying out the necessary renovation.
You also have the right to see the documents that prove all previous bills related to the house have been paid, especially the
electricity, water and gas bills. While you are at it, make sure to peruse the papers that state the property tax has been paid by
the landlord.