Tamil Nadu needs no introduction. This historically rich state is well known for its beautiful temples, vibrant culture and of course the pointless Madrasi jokes we hear in movies. Its capital city, Chennai is a bustling hub of activities.
From an horde of MNCs to ancient temples, Chennai has got it all. Hence, it is no big surprise that a good number of educated people migrate to cities like Chennai and Coimbatore mostly for jobs, this in turn has increased the demand for rental properties there. Which brings us to the point of this article, how do you make a rental agreement in cities of Tamil Nadu?
To prepare a rental agreement, first create a draft version after discussing the clauses with your Landlord/ Tenant. There are some clauses that must never be omitted from a rental agreement, which will be discussed later on in the article. Add all the details you want and once the draft is ready, review the deed. Purchase Stamp Paper of recommended value, which would depend on your rent and deposit amounts. Finally, print your deed on stamp paper. Main cities like Chennai, Coimbatore, Salem etc are in the habit of using elaborate agreements, while smaller cities like Madurai, Tiruchirapalli, Tirunelveli etc are more lenient.
Doing this might sound like a great hassle, but now you can use online rental agreement services. LegalDesk provides ready-to-use, lawyer verified, online rental agreement. You can use them to create an agreement in a matter of minutes.
Stamp Duty is essentially a form of tax levied on legal documents in return for making them legally effective. In Tamil Nadu, the Stamp Duty paid for rental agreements is usually 1% of rent+deposit amount irrespective of the lease term.
Usually for rental agreements for period below 11 months, twenty rupees Stamp papers are used. Above 11 months it depends on the amount of annual rent plus security deposit. 1% of the total amount is the Stamp duty.
If the required stamp duty is not paid, should any dispute arise and matters go to court, parties involved may have to pay almost ten times the actual Stamp Duty.
e-Stamping is widely practiced in Chennai while it is not so much in use in the other cities. Easily available at several places throughout the city, e-Stamp Papers were launched in late 2010 and is now a popular choice. As of now they are issued and regulated by the Stock Holding Council of India Limited (SHCIL). They are tied up with various banks to provide e-Stamp Paper to the general public.
Registering a document means recording a document’s contents with an authorized office/ official. This provides advantages that just cannot be overlooked. For starters-
In Tamil Nadu, registration charges are somewhere close to INR 10,000.
Omitting certain vital clauses in your rental agreement leads to unpleasant legal battles should a disagreement arise between Tenant and Landlord. Even if both parties know each other, it is ideal to draw up a comprehensive agreement to cover your backs.
Here are some of the clauses that should never be omitted-
If disagreements occur in the future, the rental agreement is going to be a focal point of the legal battle. However, there are some other factors which when overlooked can cause bigger troubles. Here are some things that you must keep in mind-
Security Deposit – Security deposit is a certain amount of money collected in advance from the Tenant to avoid losses to the Landlord due to non payment of rent or damages to the property. The amount is usually few months worth of rent and is refundable at the time of returning keys to the Landlord.
Token Advance – Token advance refers to a small sum of money paid by the tenant to the landlord prior to the signing the rental deed. The idea is to prevent the Landlord from letting other potential tenants from developing an interest in the property. Once the token advance is paid, the deal is considered final. If one party decides to backout, he/she is liable to compensate for the losses incurred by other party.
Now you can create your own rental agreement online by following these steps: