April 27, 2000
- Real Estate
So you are all set to go in for a Leave and License agreement. But don't sign on the dotted line just yet. Before you go any further, here's what you should make note of.
WHAT THE AGREEMENT MUST INCLUDE
Exact lease period
Security deposit return clause stating that the deposit has to be returned to the tenant within 7 days of expiry of the lease term or else interest will be charged per day
Rate of interest to be paid in case of deposit not being returned must be specified
Names of people permitted to reside on the premises
Whether premises are to be used for residential purposes or otherwise
If furniture is being provided, the agreement should be split into two: Leave & License / Furniture & Fixtures agreements
A clause indicating that the agreement will be terminated due to earthquake, riot or such acts of nature so the tenant need not pay for the period that premises are not occupied
Other than a security deposit, if a deposit is taken against non-payment of telephone or electricity bills, the exact amount should be stated
A clause stating when the deposit has to be returned to the licensee if all bills are settled and, if not, the rate of interest to be imposed
A clause indicating that the licensee stays in possession of the apartment till the landlord returns / settles all his dues
A clause regarding what causes a breach of contract by either party and what the penalty is
A clause indicating that the licensee has a right to stay in the apartment for the specific time period even if the owner decides to sell, transfer or mortgage his property
A provision of at least three months notice in case either party wants to break the contract earlier than the original period
CHECKLIST FOR THE LANDLORD
Don't permit the licensee to stay on the premises until the agreement is written on a stamp paper and duly signed by both
If you are open to negotiations, fix the rentals slightly higher than what you would like to earn
Municipal taxes and monthly society outgoings will have to be paid by you
Utilities like the telephone and electricity bills have to be paid by the licensee
Check the credentials of the client and ask for references
All agreements should be in writing
A client has the right to verify if past electricity and telephone bills have been paid (keep paid bills ready)
A client has the right to check the title papers and the floor plan to verify the area of the apartment
Ask for a no-objection certificate from the society giving permission to lease the apartment
The society may levy a non-occupancy charge on the owner of the premises
Do not extend license periods by a supplementary document; draw a fresh agreement
CHECKLIST FOR THE TENANT
Leakages: Check for leakages and ask the landlord to rectify them. If he does not and you are still willing to stay there, negotiate for a lower deal.
Title documents: Does the person leasing the apartment to you actually own the apartment?
Electricity bills: The electricity meter should be in the owner's name and the past bills should have been cleared.
Society objections: A no-objection certificate, or NOC, from the society permitting the lease of the apartment
Plans: The floor plan should clearly tell you what the area of the apartment is and a qualified architect must have certified the plan.
Payments: All the payments (monthly rent and deposits) required from you should be stated in the agreement.
Cheque payments: Make each and every single payment only by cheque
If the owner of the apartment is not signing the agreement then make sure that the person doing so has the Power or Attorney to that effect
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