Why you should get your rent agreement registered

Looking to rent out your house to someone? Make sure that you enter into a rental agreement first. A rental agreement is a legal contract signed between the landlord and the tenant. A tenancy agreement registration serves as valid proof in case of any potential dispute. If you are renting a property for at least 12 months or more, it is mandatory to have a registered rental agreement. However, if the rental agreement is set up for less than a year, it is not legally required to have a registered rental agreement.

DIFFERENCE BETWEEN A REGISTERED AND A NON-REGISTERED RENTAL AGREEMENT

The differences between a Registered and a Non-Registered Rental Agreement are as follows:

Registered Rental Agreement

Non-Registered Rental Agreement

Rental agreements for 12 months or more.

Rental agreements for a period of less than 12 months.

Can be admitted as proof in a court of law.

Difficult to present as evidence in a court of law.

A notary may notarize a non-registered rental agreement. However, even then, it may be admissible only as proof of address and may not be sufficient to protect the parties' rights. You can prepare a non-registered rental agreement on INR 50 or INR 100 Stamp paper issued by the state.

Hence, in an 11-month rental agreement, registration is not mandatory. You would have noticed that typically, tenancy agreements are for 11 months. You may choose to enter into an 11-month rental agreement to avoid the compulsory registration requirement.

RENTAL AGREEMENT REGISTRATION

If the rental agreement is drafted for 12 months or more, then a rental agreement registration becomes essential. You can register a rental agreement at the registrar’s office in that city. The registration fee of a registered rental agreement differs from state to state. The registered rental agreement is legally binding on both the parties and is admissible as proof in a court of law.

A landlord may rent out his property for differing periods. Stamp duty on the rented property depends upon the time for which the property is rented:

Time

Payable Stamp Duty

Rental agreements between 1 to 5 years

2% of thrice the average annual rent.

Rental agreements between 6 to 10 years

2% of four times the average annual rent.

Rental agreements between 11 to 20 years

2% of five times the average annual rent

Rental agreements beyond 20 years

2% of the six times the average annual rent.

Only the rental agreements of more than one year should be registered. For other rental agreements that are of less than one year (for example, 11 months), notarizing it with the notary public and paying the stamp duty is good enough and credible.

Now that we have understood the basics of rental agreement registration, let us understand the procedure for registration of a rental agreement:

• Get a rental agreement drafted by a lawyer.
• If you are the tenant, you need to get the rental agreement printed on a specific value stamp paper.
• Both tenants and landlords need to sign at the designated places on the rental agreements.
• Get the signature of two witnesses who are not related to either the landlord or the tenant.
• After this, both the tenant and the landlord must be physically present at the sub-registrar’s office of their sub-locality.
• Both tenants and the landlord, and two witnesses need to carry their two passport-sized photos and ID cards for verification and validation.
• Any third person or any agent cannot carry out the registration of the rental agreement.
• As soon as you pay the stamp duty, the registration is complete.

The registration fee for a rental deed agreement is typically around INR 1100. The rental agreement registration fee is payable regardless of the rental amount or the property value. The stamp duty charges are also applicable to the registration fee for the rent agreement.

Documents Required for Rent Agreement Registration

Following documents are required for a registered rent agreement:

• Original ownership documents or title deed.
• Two passport-sized photographs (tenants, landlords, and two witnesses).
• Aadhar card
• A government authorized identity proof (voter Id, passport, driving license, etc.)
• If the tenant is a company, then an authorization letter from the company is required. This authorization would validate the tenant’s right to register.

Online Rental Agreement Registration

In today’s world, whether it is about buying products or choosing services, most individuals look at nowhere else but the internet. The same situation can also be seen when it comes to making a Rental Agreement. However, there are only a few states in India which allow online rental agreements. Let’s find out how registering rent agreement online works.

Process for Online Rental Agreement Registration:

The process to get an online registered rent agreement is as follows:

• Firstly, visit the authorized government website.
• Find out the online rent agreement option on the main page.
• Choose your jurisdiction from the given list.
• Provide your details required in the form.
• Fill in the details of the other party.
• Submit the details of tenant, identifiers, and landlord
• Now move to the next step, i.e., rental agreement information, and fill in the details

The documents required for an online registered rent agreement are:

• PAN card and Aadhar number of tenants, landlord, and two witnesses.
• A biometric scanner to scan thumb.

How to Create a Rent Agreement Draft?

A registered rent agreement sample is typically available online on many websites. A rental deed agreement should contain the following elements:

• Names and addresses of the landlord and the tenant.
• A brief description of the property.
• The date by which the rent would need to be paid.
• What would be the mode of the rent payment?
• Exit options.
• Amount of refundable security deposit and how and when would it be refunded?
• What utilities are provided to the tenant?
• What facilities can the tenant use?

A rent deed means a contract between the landlord and the tenant, and hence, it should serve not only as proof of the tenancy but also as an instrument to protect the parties' rights. Hence, it is preferred that you consult a local lawyer before drawing up a rental deed agreement and get clarity regarding registration, stamp duty, etc.

Frequently asked questions

What are the Benefits of a Registered Rent Agreement?

• Legal Validity: A registered rent agreement is legally binding and enforceable in court. It provides strong evidence of the terms agreed upon by both the landlord and the tenant.
• Protection Against Fraud: Registration ensures that the agreement is recorded in government records, reducing the chances of fraud or misuse.
• Clarity and Transparency: A registered agreement clearly outlines the rights and obligations of both parties, minimizing disputes and misunderstandings.
• Tax Benefits: For landlords, a registered rent agreement can help in accurately declaring rental income, which can be beneficial for tax purposes.
• Proof of Residence: For tenants, a registered rent agreement serves as valid proof of residence, which can be used for various legal and administrative purposes.
• Prevents Unlawful Eviction: A registered agreement protects tenants from unlawful eviction, as it provides a legal basis for the tenancy.
• Enforcement of Terms: If any party breaches the terms of the agreement, a registered document can be used to enforce the agreed terms legally.

What if a Rent Agreement is Not Registered?

• Legal Enforceability: An unregistered rent agreement may not be enforceable in court, making it difficult to resolve disputes legally.
• Lack of Evidence: In the absence of registration, proving the terms and existence of the agreement can be challenging.
• Risk of Disputes: Unregistered agreements may lead to misunderstandings and disputes between landlords and tenants due to lack of clarity on terms and conditions.
• Penalties: In some states, non-registration of a rent agreement above a certain duration may attract penalties or fines.
• Limited Legal Protection: Tenants may have limited legal protection against eviction and other issues without a registered agreement.

What is the Difference Between Registered and Non-Registered Rent Agreement?

• Legal Validity:
  • Registered: Legally binding and enforceable in court.
  • Non-Registered: May not be enforceable in court and may lack legal standing.
  • Registered: Officially recorded with the government, providing clear proof of the agreement.
  • Non-Registered: Lacks official record, making it difficult to prove the existence and terms of the agreement.
  • Registered: Easier to resolve disputes through legal means.
  • Non-Registered: Dispute resolution can be challenging due to lack of legal enforceability.
  • Registered: Helps in accurate declaration of rental income for tax purposes.
  • Non-Registered: May lead to issues in declaring rental income.
  • Registered: Provides stronger protection against unlawful eviction.
  • Non-Registered: Limited protection for tenants.

  Who Keeps the Original Rent Agreement?

  Typically, both the landlord and the tenant keep a copy of the rent agreement. However, the original rent agreement is often held by the landlord, while the tenant retains a duplicate or notarized copy. In the case of a registered rent agreement:

  1. Landlord: Keeps the original or a certified copy of the registered agreement.
  2. Tenant: Retains a certified copy of the registered agreement.
  3. Sub-Registrar Office: The registration office also keeps a record of the registered agreement.

  Both parties should ensure that they have accessible and secure copies of the rent agreement to refer to in case of any disputes or legal issues.