A legal document lays out the prescribed terms and conditions, designed for renting of commercial property, that is leased “out”or “in” with the information about the lessor, lessee, tenure of lease, lease payments payable and other terms to be followed by the lessee and lessor during the term; though the relation is cordial and dependent between the land lord and the tenant for most of the time, good to have a written rental agreement in place if the relationship turns sour, become fraught with complaints and misunderstandings, independence does not rule the most.
This format can be used for leasing of commercial property, signed, to indicate agreement to the conditions placed during the lease terms. It is a legal document having force of law which may referenced by courts in the event of a disagreement. The lease deed must be printed on a value of non-judicial stamp paper or a duty payable, depend on the State and the value of the lease payable as per the lease agreement, registered or signed at a Sub-Registrar Office having jurisdiction over the premises to be leased and executed, with each party retaining one of the original copies.
The agreement specifies the terms and conditions based on which the property is let-out with the description, security deposit and purpose for which the property can be used residentially or commercially, and the duration is must for the agreement charges. It is to avoid paying the charges that many landlords and tenants mutually agree to not get the agreements registered, to share the cost.
Unregistered lease deed is inadmissible in evidence but the registration of lease deed is mandatory in requirement with the tenant of the property to vacate at any time. Since the lease deeds executed between the parties being for more than one year were required to be compulsorily registered, instead having a copy of more property to be leased out, but do not confer any right on the lessee to continue to be a tenant for the term stipulated in deeds.
The Checklist for the Stages of a Lease Deed
A lease can be understood as the rightful separation of ownership and possession i.e. prior to the grant of the lease, the Lessor has the right to enjoy the possession of the land during the concurrence of the lease, excluded the right; the usage of the term ‘demise’ in a Lease Deed or instrument of lease triggers the Lessor’s liability for the warranty and price rate of entitled to remain in possession until the lease, terminated by due process of law; as per section 105 of the Transfer of Property Act, the definition of ‘Lease’ can be understood as a transfer of a right to enjoy the property for a certain time or in perpetuity in consideration of a price-paid or promised or of money, service or any other thing of value to the Lessor who accepts the transfer on such terms of the law pertaining the transfer of property and/or the usage rights of property covered under the Transfer of Property Act, 1882 (To PA).
The entire transaction executed Lease Deed can be broken through the stages:
Negotiation Stage:
Stage of the transaction and comes into effect, right after the Lessee has identified property suitable for the parties involved there, shall need to discuss the commercial aspects of the deal such as duration of the lease, consideration and mode of payment with the focus on commercial aspects rather legal aspects.
Preliminary Documentation Stage:
The commercial aspects of the transaction been agreed upon the parties involved get into an Agreement to Lease or preferably a Memorandum of Understanding recording the commercial aspects of the deal with the broad duties and obligations of the respective parties. The creation place on record the intention of the parties, allowing the next stage of the process through investment and investigation.
Title Investigation or Due Diligence Stage:
The focus is to verify the Lessor’s title to the property and the Lessor’s ability to demise the property, typically involves a thorough reading of the title deeds, verification with the Government records at the respective office and finally the issuance of Public Notice is not mandatory avoided, based on the situation necessary to see what permission are mandatory and the steps required to obtain the basics.
Drafting and Payment of Stamp Duty Stage:
The lease can be demised by the way preferred mode is a Lease Deed as it is not contingent or usable upon the future instruments. Once the document got drafted, consideration the various terms of the transaction and the draft approved by the parties; the payment of stamp duty can be undertaken on the Lease Deed.
Execution and Registration Stage:
Involves the payment of premium by the Lessee to the Lessor, simultaneously exchange the consideration amount, with the possession of the property and execute the Lease Deed, though not mandatory for the practice for two people to record the signature as witnesses to the execution of the Lease Deed; once the instrument has been executed for registration.
Post Registration Stage:
Once the registration of Lease Deed, the property is in possession of the Lessee, advisable the various governmental and semi-governmental bodies with the jurisdiction over the property be notified about the holder, ensuring smooth transition making applications and acquiring Licenses relatively easy.
The Lessee Hereby Agree to The Following Covenants:
- Developing land and construction shed under Group Work-Shed Scheme, to sub-let the power-loom shed under Group Shed to the members for the purpose of power-loom unit activity. Paying taxes, impositions, assessments and dues-duties are mandatory, payable in respect of the leased land to the Government of Maharashtra.
- Disposing the said leased land or act may adversely affect right title and interest of the Lessor over the Lease Land, adversely affect the right and interest without the prior consent.
- The Lessees peacefully hold possession, the term of Lease without any interruption, disturbance and claims whatsoever by the Lessor or any person claiming the subject, the Lessee observing and performing the covenants, conditions and stipulations herein contained on his part to be observed and performed.
The Agreement shall be governed by and will be construed in accordance with the Laws of the State of Maharashtra, but the Agreement is not enforceable the remaining provisions remains valid.
What is the Inspection of the Demised property through Lease Deed?
This should be permitted by the Lessee with prior notice at reasonable hours with the study of applicable law pertaining the payment of Stamp Duty and Registration of the Lease Deed, ensuring the adequate payments made and the forum followed but the obligations is to pay the Stamp Duty and Registration Fee with the transactions through governmental and residential/incidental charges.
At the end of the Lease Deed , the execution of a Deed of Surrender of Lease is preferably applicable and recommendable either of the parties to get their own insurance over on the demised property to protect against the unexpected event for the identification of jurisdiction of the relevant Court and the dispute of redressal mechanism in the event arising between the Lessor and Lessee. But the Indemnity clauses in the Lease Deed covers foreseeable incidents like defaults in the payment of rent, damage to property and defect in title.
The aforementioned is a basic outline for the process of drafting a legally competent and balanced Lease Deed with a corporate purpose in mind, without any affairs to be demonstrated.