Rent Agreement in India: Must-Have Legal Clauses and Draft Format Explained
By Fathom Legal Advocates and Corporate Consultants
Whether you’re a landlord or a tenant, having a legally sound rent agreement is essential to avoid disputes, ensure clarity, and protect your rights. While many people still rely on informal, handwritten, or outdated formats, the law favours a well-drafted agreement that clearly outlines the expectations and obligations of both parties.
Here’s a guide to the key components and legal clauses every Indian rent agreement must include.
- Type of Agreement Most residential leases in India are signed for 11 months to avoid registration under rent control laws. However, if the term is 12 months or more, the agreement must be registered under the Registration Act, 1908.
For commercial properties, agreements are usually longer and must be registered and stamped as per state laws.
- Essential Details to Include
- Names, addresses, and ID proofs of landlord and tenant
- Description and address of the rented property
- Purpose: Residential or commercial
- Lease duration (start and end date)
- Monthly rent amount and due date
- Mode of payment (bank transfer, cheque, cash)
- Security deposit amount
- Key Legal Clauses to Add
- Lock-in Period Clause Defines a minimum period (e.g., 6 months) during which neither party can terminate the lease without penalty.
- Notice Period Clause States the notice required to terminate the agreement (usually 30 days by either party).
- Rent Escalation Clause Specifies the percentage increase in rent after a defined period (typically 5–10% annually).
- Maintenance and Utility Charges Clarifies who will pay for electricity, water, society fees, and repairs, landlord or tenant.
- Subletting Clause Restricts or permits subleasing to third parties with or without landlord’s permission.
- Use of Premises Clause States that the premises will not be used for illegal activities, and only for the agreed purpose.
- Entry and Inspection Clause Gives the landlord the right to inspect the premises with prior notice (typically 24–48 hours).
- Dispute Resolution Clause Provides a mechanism to resolve disputes — usually through arbitration or local courts.
- Termination and Breach Clause Outlines the consequences of violating the agreement — such as eviction, forfeiture of deposit, or penalties.
- Registration and Stamp Duty
- Rent agreements exceeding 11 months must be registered at the Sub-Registrar’s Office.
- Stamp duty varies by state. For example:
- Maharashtra: 0.25% of total rent + deposit
- Delhi: ₹100
- Karnataka: ₹200 for registration
Unregistered agreements (when registration is mandatory) may not be enforceable in court.
- Digital Rent Agreements Some states (e.g., Maharashtra, Delhi) now allow e-registration of rent agreements. This saves time and ensures legal validity. Visit your state’s Registration Department portal to check eligibility.
- Precautions for Landlords
- Verify tenant’s ID and police background check
- Include penalty clause for delayed rent
- Clearly mention lock-in and eviction terms
- Precautions for Tenants
- Ask for rent receipts and proof of landlord’s ownership
- Ensure deposit refund terms are documented
- Avoid oral agreements or cash-only dealings
At Fathom Legal Advocates and Corporate Consultants, we help both landlords and tenants draft, vet, and register legally airtight rent agreements tailored to local laws. Whether it’s a residential flat, a commercial unit, or a shared property, we ensure your interests are protected from the start.
