A rent agreement is a document signed between the tenant and the landlord to legally document the renting process; it can either be a lease or a license. The tenancy could be executed through a license or a lease agreement is basically decided by the tenancy period. These two arrangements are ruled under different laws and thus, have different characteristics.
Different Between Lease and Rent
If you are looking for a retail area for lease in Gurgaon or a retail shop for rent in Gurgaon. Then you should always know the key differences between lease and rent. Section 105 of the Transfer of Property Act, 1882 defines the proper definition of a lease. As per the section, a lease ‘is a transfer of a right to enjoy the property, made for a certain time, express or implied. And in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
For a rent agreement to become a lease, it must fulfill the below mentioned conditions:
1-The landlord has to transfer the property usage rights to the tenant.
2-The agreement has to be for a specific period or for perpetuity.
3-The landlord shall receive a monthly rent in exchange for transferring the right to enjoy his property to the tenant. Apart from cash, the two parties can enter into an agreement where the tenant could pay a share of crops, services, or anything that holds a market value’.
A lease contract must be signed. When the landlord plans to let out his premise for a longer period of time. This could range from 3 years to eternity. Also, a lease deed must be stamped and register. Owing to the registration, lease agreements are generally not easy to terminate.
What is a lease deed?
A lease deed is an agreement that is written between the property owner and the tenant that carries all the legal terms and conditions. A lease deed is usually sign between the two parties at the time of renting of commercial property. A lease deed needs to be register if the lease period is for more than 11 months.
More common in commercial renting
When it comes to commercial renting. Owing to the high-value transaction involved in a commercial transaction that requires proper legal aid to both, the landlord and the tenant. Leasing is a common practice in the commercial real estate segment. In such cases, the complete exercise is documented and formalized. The same is not true when it comes to renting in the residential segment. Especially in the low-cost or mid-range property sector, where both, the tenant and the landlord doesn’t want to involve themselves in the hassle of the paperwork and decide pertaining to tenancy on their instinct or gut feeling.
What is rent agreement?
A rent agreement is a document that is signed for an 11month period and falls under leave and license contracts. It doesn’t have any validity under the rent control laws. Rent control laws differ from state to state. And have their purview all lease agreements that are conducted for a law period of at least a year.
The union cabinet has now approve the model tenancy law that has all rent agreements that are execute for periods exceeding 11 months and will be guided by the rules under the new law. The states are coming up with their own version of the model tenancy law or changing their existing law before implementation.
If you are looking for a retail area for lease in Gurgaon or a retail shop for rent in Gurgaon. Then always consider the rulebook for both terms because commercial property is all about getting a place according to your requirement for a long period of time.