Format of Lease Agreement in India

Introduction

A lease Agreement is created between the Lessor & Lessee who provides the rights to the lessee for using the property for a period of time owned by the Lessor but ownership rights are not given to the Lessee.

Lease Agreement

A contract in which one party transfers its property to another party for a specified period of time in return for a periodic payment; that property can be land, machinery, vehicle, and a piece of equipment.

It is important to note the meaning of “TRANSFER OF INTEREST”. If the Lease Agreement creates an interest in the property entitling the transferee to enjoyment then it is a LEASE. But if it only permits another person to make use of the property without exclusive possession then it is not a lease but rather a LICENSE.

Legal Elements of Lease

• LESSOR: The owner of the property is called Lessor. 

• LESSEE: A person to whom the right to enjoy the property is granted by the Lessor.

• SUBLESSEE: A person to whom the right to enjoy the property is being Granted by the Lessee.

• SUBJECT MATTER: The leased property.

• LEASE AGREEMENT: A contract between the Lessor and Lessee.

Format of Lease Agreement in India

A lease agreement in which specifies the agreed-upon terms and conditions on the basis the property has been leased out.  These terms and conditions must be followed by both the parties i.e. the Lessor and the Lessee. The lease agreement has to be on stamp paper and needs to be signed and notarized. Many elements need to be covered in a lease agreement for the protection of the Lessor and Lessee. Some important elements that must be included in a format for lease agreement in India which is given below: 

• The names of both the Lessor and the lessee or their agents.

• Description of the property such as the location, address and built area, etc.

• The amount of rent which will be charged and the date on which will need to be paid.  It also includes any grace period which allowed for late payment and if there are any penalties such as late charges that will need to be paid.

• The mode in which the rent needs to be paid.

• What will the usage of the leased property be? What are the activities which can be performed on the property that takes for lease?

• Many ways in which the agreement can be terminated before the date of its expiration along with any charges that will be charged for such termination.

• The amount which has been given as a security deposit along with the account in which the security deposit is being held.

• The lessor has provided the list of utilities and if there is any charge for the utilities which are levied by the lessor, in what way will the charge for those services be fixed?

• Various rules and regulations such as rules related to noise, allowing pets, holding parties, etc. are followed by the Lessee. If violate any rule which is specified then he may pay the penalty. 

• Specifying where the parking is available, and if there is any designated parking then it should be clearly specified with the location.

• Specify the manner mentioned in which the requests by the lessee for repair will be handled and in the case of emergency requests what will be the procedure?

• The time period for which the lease agreement will be affected.

• If the lease is to be extended then the terms will be enforced.

Procedure for Lease Agreement in India

• Draft the lease agreement with the consent of both the party’s lessor and lessee on all the points. After that, it will be printed on a Stamp paper of the required value. 

• Then Lessor and the lessee will sign the lease agreement in front of two witnesses.

• Those two witnesses also sign the lease agreement and attest to it.

• Then the lease agreement document will be registered at the nearest Sub-Registrar office once the applicable registration charges are paid and attested through a notary.

Conclusion

It concluded that the lease agreement between the lessor and the lessee should be signed, notarized, and registered.  This will make it easy for all concerned parties to understand their responsibility and role and that of the other party.  Generally, the relationship between a lessor and a lessee is a jovial one and yet it has a written agreement to deal with any possible future misunderstandings or discrepancies in the future.

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Author:

Radhika Punani
Ambala
I am Radhika from Ambala city. I qualified LLM from Kurukshetra University and B.A.LLB from Maharishi Markandeshwar University