After owning a house and if found surplus, we can propose to let it out for a good tenant to have a neighbor. In this connection, before finalizing the things, once the proposed tenant agree to the offer made by the owner, including the rental and other terms & conditions, both the parties should agree to reduce the terms and conditions in to writing, in order to avoid any possible misunderstandings, besides the fact that, such relationship is linked with finance in the form of rental at monthly intervals besides security deposit amount, as advance.
As far as the Landlord is concerned, he should make himself sure that the tenant is trustworthy and credit worthy to meet the financial obligations and honour other terms and conditions. In this regard, the Landlord shall enquire about the proposed tenant’s position and his financial background to ensure the prompt and timely payment of monthly rentals. It is further essential to know about the financial status and the income source as well as the business place or work office etc., of the prospective tenant.
From the tenant’s point of view, the tenant should first of all satisfy himself that, he is dealing with the true owner of the house and that there would not be any problem whatsoever either financially or in any manner, after finalizing the tenancy agreement.
The salient features of the tenancy agreement are as hereunder.
à The period of tenancy – usually it shall be for a period of eleven (11) months since if it is beyond 11 months, say 12 months & above, such an agreement need to be registered, which involve financial burden either to the tenant or to the landlord, hence usually, the period of tenancy agreement would be generally confined to eleven (11) months.
à The date of commencement and the duration of the tenancy, and the expiry date of such tenancy period.
à It should contain whether a notice has to be served by either of the parties to the other, either for eviction or to vacate the property, before conclusion of the tenancy period.
à It should mention whether liberty is given to the tenant to further renew the period of tenancy, before the conclusion of the tenancy period.
à It should specifically mention, under what are all conditions, and/or failures on the part of the tenant, the tenancy shall automatically come to an end , and the tenancy shall vacate the house without any notice or correspondence.
à A list showing the fixtures and furnitures, available in the house, at the time of entering into in such tenancy agreement should be appended therewith.
à If the tenant is given the opportunity to further renewal of tenancy period, the rental agreement, should contain what would be the rent during such extended period, besides mentioning the period for which such renewal is agreed, and any other terms and conditions, regarding advance etc., to be specifically furnished.
à The amount of security deposit payable by the tenant to the land lord, and its mode of payment to be mentioned therein.
à The mode of payment of monthly rental should be mentioned. In case there would be deduction of TDS, such clause also should invariably be mentioned.
à Most importantly, the rental agreement should contain several ‘covenants’ separately pertaining to ‘Land Lord’ and the ‘tenant’ vis-à-vis Do’s and Don’ts to be mentioned therein.
à It should specifically stipulate that in the event of default committed by the tenant either in payment of monthly rentals, or in any manner, as mentioned in the rental agreement, the tenancy shall come to an end, and the land lord shall have every right to get the tenant evicted from the premises without further notice, at the cost and expenses of the tenant.
Besides the above, the rental agreement should also contain, all other relevant details which will protect the rights of the land lord legally should be incorporated.