Leave and License Agreement Registration – Why Should You Do It?

by ADDA.io

Leave and License Agreement Maharashtra landlords and tenants have always been tangled in the horns of a dilemma when it comes to the Leave and License Agreement. L & L Agreement is necessary to be registered under section 55(1) of Maharashtra Rent Control Act 1999. Section 55(2) places this responsibility clearly on the landlord. Section 55 further stipulates, in the absence of a written registered agreement, contention of the tenant about the terms and conditions on which the premises have been given either on leave and license or even let out shall prevail. Under Section 55(1), it is clear that only the agreement of tenancy or leave and license executed between the landlord and tenant or the landlord and the licensee is required registration.

What gave birth to the dilemma horns?

Landlords and tenants attempt to bypass the rule to register their Leave & License Agreement, mostly for the costs incurred in the process. Landlords and tenants have to share payment of INR 1000 in urban areas and INR 500 in rural areas as registration fees. Parties are also expected to pay stamp duties. In accordance to Article 36A of Bombay Stamp Act, 1958, the following is the formula to calculate stamp duties:

Rent per month x Number of months = A

Advance rent for the period/non-refundable deposit = B

10% x Refundable deposit x Number of years of the agreement = C

Total amount subject to stamp duty = D = A+B+C

Stamp duty = E = 0.25% x D

Therefore, higher the monthly rent and deposit, higher the stamp duty. On the other hand, getting a Leave and License Agreement notarised by a notary is a simple affair and can be done on something as simple as an INR 100 stamp paper and very nominal notary fees.

With the Maharashtra Rent Registration Department, directing the law enforcement department to verify ONLY registered L&L agreements, let us look at some of the long term benefits of registering the documents, despite the seemingly high costs:

Proof of Address

Registering the agreement, gives it validity to act as a proof of residence for the tenant. Individuals staying in rental properties, usually do not have electricity bills, telephone bills or water bills issued in their names. Consequently, they find it difficult to furnish proof of local address. Since notarised agreement do not have the legal weightage of registered documents, they are often refused as proof of local residence in places that are thorough and meticulous with their documentation. The validity of notarised agreement is questionable. Hence, there is no guarantee that places which had once accepted notarised agreements as residence proof, will not reject or stop their services due to insufficient documentation.

Landlord And Tenant Legal Protection

There is no predicting when trouble might strike. It gets only worse when it is of a legal nature. The laws of the land laid down often benefit the tenants in events of legal disputes between tenants and landlords. In the event of absence of a registered agreement, the tenant’s claims of the provisions of the rental agreement will be upheld in court. Conversely, protecting the tenant’s fundamental tenancy rights, becomes simpler. Seeking redressal at the first steps, like filing police complaints, is less complicated and definitely more hassle free. There is also a chance of receiving fair justice. The absence of a registered agreement, causes court battles to be heavily dependant on which party can afford a better lawyer. Keeping a registered agreement, at the very onset of the tenancy, helps to do away with this disparity in event of unfortunate legal issues.

Detailed Specification Of Clauses

Unlike notarised documents, registered agreements go through rigorous verification. As a result, they include every clause a proper leave and lease agreement should contain. Some important clauses that every landlord and tenant should take note are:

  • Details of landlord and tenant including government approved identity proof of both parties and permanent residential addresses.
  • Explicit details of monthly rent amount and what it includes. It must also be mentioned if rent is to be paid in advance or arrears.
  • The amount of security deposit collected and its type – refundable or non refundable.
  • The exact period of validity of the agreement. The usual time period is six to eleven consecutive months in one calendar year.
  • Mention of maintenance and utility charges in exact amount and who is responsible for their payments.
  • Clear statement of terms and conditions of cancellation and notice periods.
  • Lock-in period and all penalties incurred on breaking it.
  • Representations by both parties noting down responsibilities of landlord and tenant responsibilities towards financial transition, property management and behaviour in society at large.
  • Any other miscellaneous clauses that are relevant to the property being rented out.

Believe Us, It Is Easy

The Maharashtra Government has not shied away from technology. It has adopted technology to ensure the registration can be done online on https://efilingigr.maharashtra.gov.in/ereg/. It is advised to go through the website before registering, to know the prerequisites for registration. For individuals choosing to do the registration manually, a good format to follow is at https://efilingigr.maharashtra.gov.in/ereg/downloadstuff/LAndL.pdf.

Saving a few bucks in the process of drawing a rental agreement, may seem to be a good deal at the outset. However, we all know how materialism is moh maaya. Thus, look deeper into registering the leave and license agreement. So while it may feel a tad on the expensive side initially, it is also a promise of security of tenancy terms from the state to its citizens.

Also, read “Fire Safety Norms for Apartment Residents in Mumbai“.

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