What is a lease deed and how does it vary from a rental agreement?
The owner of commercial property frequently lends it to a third party in exchange for money. To establish a shared basis, a legal agreement is created and signed by the property’s owner or lessor and renter or lessee. This is referred to as a Lease deed. Here’s what you should know.
What exactly is a lease deed?
A lease deed is an agreement between a landlord and a tenant to rent out a business property for an extended period of time. Writing a Lease deed is required under Section 17(D) of the Registration Act 1908. The deed must be printed on non-judicial stamp paper and recorded at the leased-out property’s sub-registrar office (SRO).
Typically, two copies of the Lease deed are acquired, with each party holding one of the originals.
Format of a lease agreement
- A lease agreement should include the following provisions:
- Parties’ names and contact information
- Lease term
- Lease obligation includes the financial stipulations as well as the amount payable at each predetermined period. It will also include the amount of the security deposit. When the agreement expires, this sum is refunded to the renter.
- notice period
- Exit clause agreed upon by both parties
- Terms of renewal
- Subletting provision determined by the owner and agreed to by the tenant
The distinction between a rent agreement and a lease deed
The duration of the contract distinguishes between a Lease and a Rent arrangement. A Rent agreement is a contract made for the use of the immovable property for roughly a year. A Lease deed is used when the term is more than a year. This explains why rent is frequently referred to as a permission and licence contract under Section 52 of the Indian Easements Act of 1882.
Stamp duty on a lease agreement
The stamp duty on lease deeds varies from state to state. The rate is set by the relevant state revenue agency. In West Bengal, for example, the stamp tax on lease documents is Rs 200. Stamp duty in Maharashtra is 0.25 percent of the entire rent.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
