Home to some of the most beautiful architectural structures that reflect the grandiose of the Nizams, the newly formed state of Telangana is known for its rich culture. In the recent years, especially with the boom in the IT industry, many MNCs have come up in its capital city, Hyderabad and other popular cities like Warangal, Medak etc. This has led to multitudes of people migrating to the city in search of jobs and opportunities. And this ultimately led to huge demand for rental properties.
Which brings us to the topic under discussion – How do you make a rental agreement in Telangana. Here’s how.
Procedure To Make Rental Agreement In Telangana
Discuss clauses with your landlord/tenant and draft a rough rental agreement
Print reviewed draft on stamp paper of recommended value
Place signatures of landlord and tenant at designated places along with the signatures of two witnesses
Register the deed at a local Sub-Registrar office
Preparing The Agreement
The first step in preparing a rental agreement is to discuss necessary clauses that should be included. Both landlord and tenant can negotiate the clauses and decide what goes into the contract. Once the clauses are finalized, a deed is drafted and reviewed by both parties. Keep in mind that there are some vital clauses like monthly rent, deposit, lock-in period, maintenance charges and several others which just should not be omitted.
The next step would involve purchasing stamp paper of recommended value and printing the prepared draft on it. The tenant and landlord must then place their signatures at designated places in the contract in the presence of two witnesses, who also sign the deed. The contract is then registered at the local Sub-Registrar office.
Tax levied on legal documents in return for making them legally valid is called as Stamp Duty. In Telangana and Andhra Pradesh, Govt. recommended Stamp Duty is as follows
-0 to 10 years – 0.4% of total rent payable in the lease
10 to 20 years – 0.6% of total rent payable in the lease
20 to 30 years – 0.8% of rent payable in the lease
30+ years – 5% of the total rent payable in the lease
e-Stamping is yet to be prevalent in Telangana, so for now, people are dependent on conventional stamp papers. However, there is a good chance that e-Stamping will come in to being in the near future.
Traditional Stamp Paper format currently used Telangana, Andhra Pradesh both:
Registration Of Rental Agreement
Registering a document means backing up the contract’s content with an authorized official/ office. This is a fraud deterrent method and ensures that the contract was indeed signed by the parties involved in the contract. Reasons why registering a document is vital is that
It prevents forgeries and fraudulent actions
Is proof that the document was signed by parties mentioned in it and not random people
Matters related to the property become revealed thereby exposing feuds and cases on the property
Registration charges for rental agreements in Telangana and Andhra Pradesh are charged at 5%. While appearing for registration of the rental agreement, both tenant and landlord may have to produce documents that prove their identity, title of ownership (landlord), passport size photos etc.
Types Of Rental Agreements Commonly Used
11-month rental agreement – This is the most commonly used type of rental agreement throughout the country. The term of such a contract is eleven months post which both parties can mutually agree to renew/ terminate the contract. Registration is not mandatory for such agreements and are usually overlooked.
Commercial Lease – Signed exclusively for business deals, commercial leases involve longer durations and larger sums of money. Registration and notarization are seldom overlooked and such leases
Long term lease – Signed for both residential and commercial purposes, long term leases involve durations that last in years. In most cases a lump sum is paid upfront and this sum is later returned to the tenant at the end of term.
Important Clauses To Include In Your Rental Agreement
Skipping out on certain vital clauses in your rental agreement most likely leads to legal battles should a disagreement arise between the two parties. Which is why everyone says that a rental agreement should always be in place even if the parties involved are the closest.
Here are some of the clauses that should never be omitted-
Rent, maintenance charges and security deposit – Charges for each must be clearly spelled out in the contract to prevent both parties from breaching the contract.
Pets – Landlords who cannot entertain animals in their property must make this very clear to the tenant through the contract.
Penalty for late payments – In most cases, landlords are free to levy a fine on delayed rent payments. Details about such fines must be clearly stated in the deed.
Cleaning and painting – If Landlord cleans and paints the property under discussion before the Tenant moves in, the charges for the same can be deducted from deposit paid by the Tenant. So the deed must clearly state that charges for painting and cleaning will be cut from the security deposit.
Lock in period – This refers to the minimum duration for which the deed cannot be terminated by both parties. Mention the duration of lock in period in the contract
Consequences of overstay – If the Tenant refuses to vacate the property even after the contract has ended, Landlord can decide the penalty for it. Such a penalty should be detailed in the deed.
Food habits – Landlord must mention his rules on food habits that can be practised within his property.
Things To Keep In Mind While Renting
If the landlord and tenant are going into a legal battle in the future, the rental agreement is going to be the piece de resistance of that battle. However, there are some factors that you must keep in mind-
Owner’s authenticity – Many a times, caretakers or Tenants themselves might pretend to be the owner and try to rent out/ sublet the place. It is the tenant’s job to ask for the various documents to prove a person’s claim to ownership
Payment receipts – Collect receipts for your token, security deposit and even your monthly rent. Be pushy about it if need be.
Painting and maintenance – It is a common trend among Landlords to deduct one month’s rent as painting charges from the security deposit. While this is a valid deduction, the Tenant should know that if the property was not painted freshly for him, then the landlord cannot deduct painting charges.
Registration – An unregistered rental agreement will count as collateral evidence only should a dispute arise. Keeping that in mind, try not to overlook the registration part
Security Deposit – Security deposit is a few months worth of money, collected in advance from the Tenant to avoid losses to the Landlord due to various reasons like non payment of rent or damages to the property. This is a refundable amount and that fact should be spelled out in the contract. The amount collected varies from city to city. In bigger cities like Hyderabad, Vijayawada etc it could be greater than in cities like Guntur, Nellore and Warangal.
Token Advance – Token advance too is a small sum of money paid to the Landlord before even the contract is drawn up. This serves the purpose of blocking the house from other potential tenants and thereby taking the house off the market. Payment of the token advance also considers the deal sealed and if either party backs out, he/she is responsible for compensating for the losses occured by the other party.
Making Your Rental Agreement Online
You can now save the hassles of visiting a legal professional to draft your rental agreement and create one with LegalDesk by following these steps: