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Landlord, Rent Agreement, Tension Free
Investing in properties generally has two objectives. Firstly, you want to buy it for your own use and secondly, by buying the property when you need money you can sell it and make a profit or get a fixed income every month by renting it out
Rent is the most suitable means to earn income from properties, but sometimes some tenants clash with landlords leading to disputes. The problem of ownership of the property persists if the landlord does not live there. Today we will tell you the only solution to avoid this conflict.
In most cases, rental contracts are made to protect the interests of landlords. However, despite this agreement, the landlord's interests are not completely protected from the tenants at large. In such a situation, to avoid any dispute, the owners have now started adopting the option of 'Lease and License' agreement.
Lease and license are also very similar to rent or lease agreement or tenancy agreement, only some of the conditions written in it have been changed. Know from Pradeep Mishra, property matters expert and CMD of Oram Development, how leases and licenses are made and what are its benefits.
Solely in the interest of the landlord.
Be it a rent or lease agreement or a lease and license, all these documents are created one-sidedly to protect the interests of the landlord. Both documents clearly mention that the owner is letting the property to the tenant for residential or commercial use for a specified period.
This time period can range from 11 months to a few years. It also states that if the tenant is taking the property for residential use, it cannot be used for commercial activities. Furthermore, if the agreement or lease and license is not extended after the expiry of the stipulated period, in those circumstances the tenant will have to vacate the property.
What is the main difference between the two?
In a tenancy agreement, the landlord is called the 'lessor' while the tenant is called the 'lessee', whereas in leases and licenses, it is called the 'licensor and licensee'. Rental agreements for residential properties are usually made for a period of 11 months, while lease agreements are made for a period of 12 months or more.
Furthermore, it is commonly used for renting out commercial properties. In contrast, leases and licenses can be made for periods ranging from 10-15 days to 10 years. The special thing is that all these documents can be made on stamp paper through a notary. Apart from this, if the tenancy is for 12 years or more then it is necessary to register it in the court.
Which of the two documents is better?
Lease and license can be considered better than rent or lease agreement, as it can be for a minimum period of 10 to 15 days as well as for a longer period like 10 years. Along with this, it is clearly written that the licensee i.e. the lessee will not claim or demand any right over the property in any way. Because of this, the landlord retains ownership of the property even if it is temporarily occupied by a tenant.
Another good thing about it is that when two parties mutually agree to sign a rental or lease agreement and after the death of one of the parties, his heirs can continue that agreement with mutual consent. This is not the case with leases and licenses. In the event of death of either party, it automatically becomes void. Therefore, while renting out your property, you should prepare a lease or lease and license document so that no one else can challenge your ownership of the property.