Property Lease Agreement
Property Lease Agreement
A property lease agreement is usually made from year-to-year, or for a term exceeding one year and made through a registered instrument. A lease agreement is different from a license agreement which grants right to occupy a property for less than one year. Hence, a license agreement is a right to do or continue to do something in relation to an immovable property; whereas, in a lease agreement, possession of the property is transferred.
Important Parts of Lease Agreement
The following are some of the important parts of a lease agreement:
- Parties must be of legal age
- Date of commencement of lease must be mentioned
- Terms of rent and payment of rent must be mentioned
- Purpose of the demise
- Duration of the lease
- Covenant for renewal
Drafting a Lease Agreement
While drafting a lease agreement, it is good to engage an experienced Lawyer or ensure the following parts of the agreement are drafted properly:
Recitals: Its good to have recitals in a lease agreement. However, recitals are not necessary and material facts can also be mentioned in the operative part.
Rent: Rent is mentioned in the beginning of the rental agreement after the recitals along with maintenance, premium, etc., The mode of payment of rent, due date and TDS deduction details can also be mentioned or later in the agreement.
Operative Part: The operative part of the lease agreement must clearly mention that the lessor is divesting himself or herself of possession of the property to the lessee coming into possession. Words like “the lessor hereby lets, or demises or grants a lease of 2 years with effect from the 23rd day of April, 2016, can be used for this purpose.
Lease Term: The nature of lease, commencement and duration of the lease term must be mentioned clearly.
Payment: The mode of payment of rent, due date and TDS deduction details should be mentioned. The terms should contain words like Rent is payable during the term of the lease, along with details of the due date and apportionment of rent, if any.
Terms: Terms and conditions must be mentioned after the payment details thoroughly. Some of the important terms in a lease agreement are details of payment of taxes, insurance, subletting, maintenance, purpose of lease, termination of lease, terms of lease renewal, etc.,
