Rent Agreement Maharashtra

The spirit of Maharashtra is cosmopolitan, forward-thinking, tolerant, and vibrant. There is enough to keep connoisseurs of temples, forts, old monuments, and art- gainfully preoccupied here. Forts have played a vital role in the history of the state, given the rocky terrain of the Sahyadris. Each fort marks a military triumph, and each tells a story of strategy, warfare, intrigue, and planning. All of them reconstruct the tale of an enterprising leader, Chhatrapati Shivaji- in the Deccan arena, who with fortitude went on to become one of the tallest kings of Indian history. Bombay or Mumbai—the capital of Maharashtra is not only seen as the financial capital of India but is the Gateway of India which is secular, progressive yet rooted.

The experience of Maharashtra is diverse and rich with colorful cultures, woven into one gigantic quilt. The festivals here galvanize the sleepy thousands into fervent motion. The traveler will fall in love with the miles of silver, white beaches, stretched throughout the Western coast.  Maharashtra does house some popular companies and so it is natural that a certain section of educated people flocked to the state in search of opportunities. This, lead to increased demand for rental homes and in turn, rental agreements. Let’s see how we can make a rental agreement in Maharashtra or anywhere else in the state of Mumbai.

What is the Rental Agreement and why do you need it?

A Rental Agreement is an important legal document that is signed by both landlord and tenant to regulate the tenancy. All the detailed information about the parties and the terms and conditions related to the tenancy of the property on rent is mentioned in this agreement. It includes all basic factors such as rent, security deposit, a statement regarding the property, its size, address, type, and most importantly duration of the agreement. Since it is binding in nature, both parties are advised to go through it carefully before signing and agreeing to the clause.

A rental agreement safeguards the rights of both parties from future disputes. It provides security to the landlord for his property and protects tenants from any unlawful and unjustifiable demands of the landlord. This rental agreement gives ownership of the property to the tenant for the specified time as oral agreements are not enforceable in courts of law so it is advisable to execute a written agreement.

How to make a Rental Agreement in Maharashtra?

The procedure to make a rental agreement in Maharashtra is as follows:

1. Preparing the rental agreement by discussing appropriate clauses: Both the landlord and tenant have to decide mutually what clauses they want to incorporate in their agreement. This step is vital in drafting the rental agreement and alterations in the clauses must be mutually agreed upon. Here are some clauses that should always be included while preparing a rental agreement:

• A clause related to occupancy restriction must be written clearly in an agreement that restricts the number of people who can officially live on the property.
• Include the address of the rental and make sure each adult tenant living at the address signs the rental document.
• Dates of tenancy need to be specified so both tenant and landlord are on the same page.
• When, how, and where rent payments are made must be mentioned clearly in an agreement. Be sure to clearly outline the amount of rent that you’re charging and when it’s due.
• If you’re a landlord and you’ve had problems with other tenants in the past, it’s a good idea to incorporate behavior clauses and other rules. For instance, maybe you’ve had noise objections from property management or neighbors in the past. To mitigate similar future issues, state-specific “Quiet Hours,” during which tenants must refrain from extreme noise.
• Security deposits are almost always required to rent. Pay attention to state laws that limit the maximum amount you can charge for a deposit or the types of activities you can charge. 
• Outline tenant repairs and maintenance responsibilities in a rental agreement to ensure that they understand their obligation to maintain the property according to your standards.
• The lock-in period must be included in an agreement to prevent either party from backing out of the transaction after entering into a rental agreement. This will help either party to avoid losses because a contract cannot be terminated for a minimum pre-decided period.
• If the tenant continues to occupy the property even after the end of the lease term i.e. overstay in that property, then the landlord may charge a penalty and the value for the same must be designated in an agreement.
• Non-payment or late payment of rent beyond a stipulated period may entice a penalty and the same must be mentioned in a rental agreement.
• Consequences for the deviation or breach of any terms of the contract should also be spelled out in an agreement.

2. Stamp duty requirements: Stamp duty is the amount that the tenant pays to the government to make the document legally valid. This is done by purchasing stamp paper of the instructed value. The e-stamping technology has made the process much easier. This technology was introduced to prevent the circulation of counterfeit and duplicate stamps. The tenant can buy stamp papers of any denominations now by paying the amount in the bank.
3. Signature: The Agreement must be signed by the landlord, tenant, and two witnesses at designated places to validate its legality.
4. Registration: After the agreement has been signed, register the rental agreement at the local Sub-Registrar office to discourage frauds and forgeries. It also stands as proof that the people mentioned in the document are the ones who indeed signed the document. This also reveals every information related to the property being discussed in the agreement so lawsuits and feuds going on about the property will become a matter of public record. The non-compliance with the registration requirement will discourage the rental agreement to be valid evidence in the eyes of law.

Types of Rental Agreement in Maharashtra

1. Leave and License Agreement: It is a document that permits the Licensee to occupy the property of the Licensor on a leave and license basis, as opposed to the rental agreement that creates tenancy. Hence, such agreements make evictions easier and give power to Licensor.
2. Commercial Rental Agreement: Such kinds of rental agreements are signed for business or commercial purposes only and hence they rarely have a standard format as the agreement must adapt to the needs of the particular business being considered for agreement. In this kind of rent agreement, a large amount of money is involved and is signed for a long period. Hence, registration and proper stamp duty are rarely overlooked.
3. Long-term Rental Agreement: This type of rental agreement is typically used for residential purposes where a huge lump sum is paid in advance and the agreement is for the long-term. Hence, Registration and proper Stamp Duty are important aspects of this kind of agreement.
4. 11- Month Rental Agreement: This is the most commonly used agreement format in the state of Maharashtra. The term of this agreement is 11 months at the end of which both parties have the liberty to renew/ terminate the contract. A few months’ worth of rent is collected as a Security deposit. Registration is not compulsory as the term is less than a year and such leases will require the tenant to pay a fixed monthly rent to the landlord. Hence, it is advantageous to go for this arrangement and opt for an 11-month contract. Thus, this arrangement saves money payable towards stamp duty and registration fees.

Things to keep in mind while renting a property

It is not common that parties can be tricked while taking part in the rental transaction as a tenant can be frauded by a landlord by giving the false identity of his ownership. Many things could go wrong which is why you must pay attention to the following aspects before drafting a rental transaction:

1. Authentication of an Owner: It is the responsibility of a tenant to ask for evidence to prove that the person posing as the landlord is indeed the landlord. This can be done by asking for a utility bill or title of ownership document to check the authenticity of an owner
2. Payment receipts: Collect payment receipts whenever you make any payment whether it is rent, maintenance, security deposit, token advance, etc. This will be solid proof that you have paid your dues on time

3. Deduction from security deposits: It is the tenant’s job to ask for his security deposits when he vacates the property and the landlord’s duty is to return the security deposit after providing a detailed description of the deduction on it.
4. Agreement registration: It is a wise step to make your rental agreement registered at the local sub-registrar to avoid any legal battles in the future because the court will consider your rental agreement as primary evidence and decide the case in one’s favor as an unregistered agreement can only act as collateral evidence. 
5. Token Advance: To block the property for a potential tenant, a non-refundable amount is taken by a landlord from the tenant and if either party backs out after the payment is made, that party is responsible for compensating the losses incurred by the other party.

Important points to keep in mind while making a rental agreement in Maharashtra

Governed by the Maharashtra Rent Control Act 1999, the following points must be obliged while making a rental agreement in Maharashtra: 

The property dealings that are not covered in this Act and considered null and void are:

1. Premises belonging to the Government, a local authority, through a license issued by the government or any other relationship created by a grant given by the Government.
2. Premises let to banks or any Public Sector Undertakings (PSUs) or any Corporation established under any Central or State Act, or foreign missions, international agencies, multinational companies, private limited companies, and public limited companies.
3. Premises are used for Publicity purposes of a charitable nature.
4. Premises are held by a Public Trust for a religious or charitable purpose and let at a nominal or concessional rent.

Rights and obligations to be followed by the Tenant and Landlord

• After a notice of fifteen days to be served upon the landlord, he shouldn’t neglect to make any repairs within a reasonable time. If the tenant decided to make such repairs then that can be deducted from his monthly rent.
• Under the direction of the controller, the Tenant can be evicted for making certain repairs and rebuilding. The Tenant is entitled to reoccupy the building after the repairs.
• An increase of 4% per annum is permitted in the revision of rent and other charges. Also, an increase is allowed when there is an improvement in the premises at the Landlord’s expense and after the written approval.