Lease Deed, Commercial Lease Deed, rent Agreement

Lease transactions are very common in the growing economy like India. Lease may be for residential or commercial purposes. Whatever may be the purpose of the lease (residential or commercial), in every lease transaction, there are certain legal and technical points which every lessor (landlord) and lessee has to keep in mind to protect its own interest. Of course small residential lease may not require so much detailing like commercial lease however in small transaction it is always prudent to be careful while negotiating and discussion the broader terms of the transaction. These terms play a key role in finalizing the lease deed later on.  

Both the parties (landlord and lessee) while entering into lease transaction must take some precautions so that they can avoid future complications which may be arise due to poor drafting of lease deeds. In an ideal situation, lease deed terms should be balanced and concerns of the both the parties should be taken into account. Therefore rights of both the parties should be protected. 

Terms of Residential Lease

1. Parties: Both the parties should be clearly identified and their complete details should be specifically mention in the lease deed like Name, Father’s Name, complete address of the parties etc.
2. Address of Property & its Description: The address of the concerned property should be clearly mentioned. Suppose a party takes only first floor of the building then it should be so specified properly. Secondly in a transaction where large stakes are involved, further detailed description of properly as per the concerned title documents (i.e. sale deed or conveyance deed etc) may be provided along with some technical details if desired. 
3. Commencement of Lease Deed & Periodicity: The starting date of the lease deed becomes very important in order to calculate the rent amount for the first month. Further the tenure of the lease deed plays a crucial role in deciding the factor whether it would be compulsory on the part of the parties to get the lease deed registered or not in accordance with the provisions of the Registration Act, 1908.  
4. Rent: The rent of the concerned property should be clearly mentioned and special attention needs to be given whether the rent is inclusive of charges like electricity, water, monthly maintenance, sewerage charges etc or not and the details about the due date for the payment of rent should also be mentioned clearly in order to avoid the doubts at a later stage.
   
5. Security Deposit Amount:  In case the lessee is required to deposit security amount under the terms of the lease then the quantum of the security deposit, its nature whether it will carry interest or will be interest free etc and refunding the same at the time of termination/expiration of the lease will make the terms perfect. Further in case party wish to increase the amount of security deposit in the event of escalation of the rent after expiry of initial period of lease then it should be so specified properly. 
6. Maintenance & Expenses: The detail of monthly maintenance charges and the responsibility of bearing such expenses should be clearly indicated and who will bear the other expenses like electricity bill, water bill, parking fee, house tax etc. and in case the lessee is required to bear such expenses then the details thereof should be mention properly.  
7. Lock-in Period, Renewal & Increment in Rent on Renewal: There may be certain circumstances or situation for example investment by Lessor in the said premises or the investment by lessee itself then the parties may prefer to have a lock in period clause. In such a scenario, the lessee cannot vacate the premises before the expiry of the said lock in period or the lessor cannot ask the lessee to vacate the premises before the expiry of the said lock in period. Further the parties should also mention clearly whether after the expiry of the initial term of the lease deed such lease deed shall be renewed on what terms and under what conditions including increment in rent etc. 
8. Duties of Landlord: There may be certain duties on the part of the landlord which the landlord is required to perform during the tenure of the lease deed which should be properly included in the lease deed. 
9. Duties of Lessee: There may be certain duties on the part of the lessee which the lessee is need to perform during the tenure of the lease deed which should be properly mentioned in the lease deed. 
10. Sub-Let: Whether the lessee shall be entitled to sub-let the concerned property or not should be mention clearly. Suppose if the answer is no then the landlord must specifically mention in the lease deed that lessee shall not be entitled to sub-let the concerned property.
11. Termination Event: The events on the occurring of which the lease deed may be terminated should be mention specifically. Further the notice period clause for terminating the lease deed should be specified. 
    
12. Additional key points:
    

• Furniture and Fixture: Whether the furniture and fixture shall be provided by the landlord, if yes, then the details thereof and the responsibility of the parties to bear the expenses in case damages is caused to such furniture and fixture;
• Registration of Lease Deed: Where the period of lease deed is more than one year then such lease deed is required to be registered as per the provisions contained under the Registration Act, 1908.
• Notice: Place of serving of notice in case dispute arises or otherwise.
• Title: The lessee shall ensure that the landlord shall have the valid title of the property and having right to give the concerned property on lease to the lessee. It may be mentioned in the recitals/ introductory part of the lease deed.