What is a Lease deed?
A lease deed is a contract/agreement between two or more parties acting like a lessor and lessee for a lease premium also known as rent amount. The lessor in this case is the owner of the property/premises and the lessee is the tenant of the property. A lease deed is a wider term which is a combination of lease agreement and compliance of legal mandates such as registry, notary and stamping. Usually, the lease deed is for a longer duration and gives more rights to the lessee. Every lease deed is a lease agreement but not vice versa. A lease can be a commercial lease or non-commercial lease.
Content included in Lease Deed:
The usual content included in the lease deed is as follows:
|1) The lease deed contains the recitals, that is:
> background of the agreement,
> status of the premises,
> how many floors of the premise,
> what are the benefits available to the premises, for example: fixed furniture available or not
> the annual lease premium
> annual security charges
|2) Details of the parties- It includes the name of both the parties: the lessor and the lessee
|3) Duration of the lease- The lease deed includes the total duration for which the property has been leased out.
|4) Obligation of parties
|5) Termination events
|6) Miscellaneous clauses
|7) Witness clause
|8) Payment terms- It includes the following:
> The payment terms that can be on a monthly basis or quarterly basis
> What is the due date
> Payment to be made in cash or online transaction or through cheque
|9) If a tenant wants to make any improvement in the premises, for example: installation of AC, whether he needs prior consent of the landlord? This is stated in the agreement.
|10) The agreement contains miscellaneous content like- whether the lessor can enter the premises without lessee’s consent or not. Because otherwise, it can breach the privacy of the lessee. If the lessor wants to enter the premises, then prior intimation can be given by a certain date. Intimation can be done through a notice or whatsapp/text.
Usually, these contents are given in a lease deed. Next, let us understand a very important part and that is breach or termination of the agreement.
It is mostly mentioned in the lease deed that the lessee cannot sublet the property to any other person without permission of the lessor.
Breach/Termination of Lease agreement
Usually, parties can terminate the lease deed by serving a one month notice in advance. But, there are certain conditions which if breached, can automatically terminate the contract. For example- Premises was given on lease for residential purpose to Mr.& Mrs. ABC but they used it for business purposes. In this case, as there was a breach of object, then the lease is automatically terminated. In some cases, the security amount which is paid yearly gets forfeited if there is any breach of condition.
in the lease deed, including the renewal clause depends upon the parties. It can be renewed by sending an intimation from one party (lessor) to another (lessee). Once the lessee acknowledges the same, the term starts. The second case can be Automatic renewal unless termination. Under this, after the agreement ends, it gets automatically renewed for indefinite time unless terminated by either of the parties.
Do You Know?
In the year 2020- 21, due to COVID-19, a lot of cases have arisen where the tenant did not pay the rent and the landlord went to the court for the recovery of the amount. Now, every agreement has a clause known as “Force majeure”.
It means that in certain situations that are beyond the control of the party. In this case, the party that is getting affected may not fulfill the obligation mentioned in the agreement. COVID-19 is one of those events where the tenant said that his business could not work because of this and he should not vacate the premises. In these cases, some courts took this judgment that COVID-19 is per se force majeure and the tenant should not vacate the place. On the other hand, some courts were of the opinion that COVID-19 is not per se a force majeure. Rather, the affected party needs to prove that due to COVID, they faced actual difficulty because some businesses flourished as well.
Also read: Frequently asked questions on Rent Agreement