3 Ways in Which a Lease could be Terminated

In India, the landlord-tenant association is regarded as a jural relationship and is regulated by the provisions of the Transfer of Property Act, 1882 (Act). When it comes to a landlord/tenant connection, the parties are typically observed as a lessor (landlord) and lessee (tenant). The contract under which the landlord-tenant relationship is tied is a lease agreement. 

A real estate lease contract is a binding agreement between you and your landlord. Thus, if you feel the need to prematurely terminate your lease, there will be consequences – legally and financially. There are many reasons that can be used to end a lease, but the majority of them will not offer you legal relief from your landlord. 

Occasionally, after signing a rental agreement or lease, a tenant may feel the need to leave the rental unit prematurely for several reasons. In the same way, a landlord can terminate the lease under specific circumstances. It is vital to adhere to state laws, as well as specifications that are listed within the lease, for delivering notice of intent to end a lease. 

Usually, lease termination in India can happen for a variety of reasons and by both the parties – landlord and tenant 

Termination of Lease by Tenant 

Since a lease is bound by an agreement, tenants have to adhere to the length of the tenure specified. This means that they are accountable for paying the rent stated during the duration of the lease. There are exceptions to this rule, especially if the landlord breaks or violates the lease. 

If the landlord breaches the terms of the lease, particularly health and safety codes, the tenant may be able to leave without giving notice or providing less notice than needed. In case there is a natural disaster or significant impairment to the property, it prevents the tenant from continuing to stay in the rental unit. However, if the tenant violates a lease without a legally protected reason, the landlord is entitled to sue for damages.

Termination of Lease by Landlord 

A landlord is able to legally end a lease if the tenant violates the terms of the lease or has broken the law. The violation by the tenant needs to be significant like late rent or having a pet despite the rule stating ‘no pets allowed on the premises. Other violations of the law, like selling drugs on the premises also justify the landlord’s decision to terminate the lease. 

The landlord needs to first dispatch a termination notice to the tenant, thereby making it clear that the tenancy has ended. The tenant may be offered time to amend the violation, by paying outstanding rent, for instance. There will be a notice that declares that the tenant needs to move out of the premises or risk eviction. 

Issues Pertaining to Security Deposit 

Generally, the landlords have about two weeks to one month to give back the tenant’s security deposit amount after the lessee vacates the rental premises. Landlords may subtract from the tenant’s security deposit for legitimate reasons. Deductions need to be shown in a written document and itemized, and the payment needs to be refunded for any deposit balance. It is vital to check with the landlord if the deductions are not accurate. Any agreement reaches needs to be logged in writing. 

In a nutshell, there are many ways in which a termination of a lease agreement India can happen. If you wish to know the leasing status of many companies across the country, check out CRE Matrix and its many tools for it is the leading real estate data analytics company India.

For more such exciting analysis and details on real estate, visit our website www.crematrix.com.

7 Crucial Points to Keep in Mind before Signing a Rental Agreement

Renting a home in India can be quite complicated because of the research and the planning required. If you wish to rent a home in India, it is extremely vital that you’re aware of what to look for prior to signing a rental contract

There are numerous elements that can be included in a rental agreement, and not all of them are beneficial to the tenant. In this article, we will talk about some of the most vital things you need to check before signing a rental agreement in India. 

What the Rent Includes

You need to thoroughly check the rental contract. Generally, the monthly rental amount typically comprises utilities such as electricity, water, and gas. However, be sure to check if it also contains maintenance charges and property taxes. 

Kinds of Tenancy

There are two kinds of tenancy agreements in India – the leave & license agreement and the lease agreement. A leave & license agreement consists of a duration of 11 months, after which it can be renewed. A lease agreement has the lease tenure for up to at least 12 months and can be renewed once the term is over. 

Notice Period & Penalty

If you’re looking at homes for rent India, one of the most important things to look at would be the notice period and penalty. The majority of the rental agreements have a minimum notice period of 30 days (one month). If you wish to leave earlier, make sure to check if there is a clause that talks about an early exit fee. Generally, one month’s rent would be charged as a penalty. 

Rent & Deposit

It is important to check the monthly rent amount. Ensure that the rent is budget-friendly for you and that it is light in your pocket. It is also imperative that you check the amount for the security deposit. This is generally one month’s rent but it can change depending on the landlord the agreement can differ depending on the landlord. The contract will state the monthly rental amount and the security deposit. Be sure the rental amount is aligned with the relevant market rates. 

Register the Rental Agreement 

Once you have signed the rental contract, ensure that it does get registered at the office of the sub-registrar. The fees for the registration are generally around 0.25% to 0.50% of the entire sum of the agreement. 

Check for Lock-In Period 

The majority of the contracts have a lock-in period of approximately 3 years. This means that you cannot exit the property before this period is over. 

Duration of Rent 

When you’re looking at available flats for rent in Mumbai, it is imperative to look for the length of the lease in the rental contract. The tenure of the lease is generally around 11 months, after which it can be renewed. Be sure to check if there are any clauses that state an escalation in the rent after the initial first year. Make sure to enquire about it before you sign anything. 

If you wish to know more about the various residential projects by a number of developers across India, then subscribe to CRE Matrix, a leading real estate data analytics company in India, as they can offer several tools to facilitate this. 

For more such exciting analysis and details on real estate, visit our website www.crematrix.com.

Real Estate 101 – A to Z about the Lock-In Period in a Leasing Contract

Commercial properties such as office buildings or warehouses can be observed as excellent investments. This is because they deliver high yields, are reliable, and escalate over time. It is well-known that location affects the value of a property. If it’s a commercial property with a high degree of accessibility, it is natural for the asset to make a high rent. An important but usually ignored part of CRE investments is generally the lease and lock-in periods. 

What is a lock-in period? 

Lock-in periods belong to a part of the lease contract. The significant bit is – while landlords are tied by the lease duration, lessees are bound by the lock-in period. If a property has a lease term of 9 years and a lock-in period of 3 years, the tenant needs to continue staying in the space for 3 years or pay the rent for the lock-in period if they choose to shift basis. 

Why is a lock-in period significant? 

A clause with the lock-in period in leasing agreement India is extremely important because it makes sure your returns are steady and guards your investment against struggling. Even if the lessee decides to abort the ship or the market conditions go bad for some reason (a pandemic, for instance), a decent lock-in period can be a saving grace in this scenario. It gives you more time to look for a new tenant or wait for the market to bounce back while still providing you with a return on your investment. 

So, what’s a ‘good’ lock-in period? 

In commercial real estate, the lock-in period in leasing can change from 3 years to anything like 9 years. That’s a substantial range and it generally comes down to the kind of asset and tenant in question. For instance: Firms that are into manufacturing need an industrial space that they can personalize to the last bit. They seek out longer lock-in durations (occasionally 15 years or more), since their work floor is regarded as the most stable portion of their business. 

White-collar companies require offices. They need desks, chairs, and some computers, and their necessities are met. This is why these companies want lock-in periods that are on the shorter end of the spectrum (lesser than 5 years). When it comes to warehousing, the lock-in periods typically tend to remain within 5-9 years. 

When you’re deciding to invest in commercial real estate, do keep in mind the type of property and the lock-in period it has, irrespective of the tenant. If the period is too less (e.g. lesser than 3 years), the tenant might not consider sticking around. If you’re not able to renegotiate for a longer lock-in with the tenant, it is best not to go for the property.

On the other hand, if the lock-in is too long, you have to pay the rent that’s lower compared to the market average, which is still fine as long as you are making stable returns. Several other intricate details need to be taken into consideration when you’re deciding to invest in a commercial space in India

CRE Matrix is a leading company that offers real estate data analytics India. It offers elaborate details about the leasing status of numerous businesses across the industry. You can take a look at what their leasing agreement entails including the lock-in period clauses of those contracts. 

For more such exciting analysis and details on real estate, visit our website www.crematrix.com.

4 Things You Need to Know Before Signing a Contract for Leasing Commercial Space

Signing a lease is a significant milestone for a new business owner. Whether you’re launching a store or shifting to a new office space or leasing out facilities for production. At some point, you’re most likely going to have to set aside some space for your business. 

Once you have zeroed in on the space, signing the agreement often feels like the final step before you can shift in and concentrate on running your business. But similar to the majority of other legal agreements, a business lease is a vital piece of document that needs thorough research. 

The fine print in a commercial lease is extremely imperative. There are two basic steps that need to be followed prior to signing a lease: 1) Conduct a thorough search and 2) Need to know of general statutes that are included in business leases. 

Once the basic pricing and term structures have been established, it’s time to understand some of the less-obvious details. Here are a couple of things a business owner needs to be aware of before signing a leasing contract India:

Transfer Structure: Determine how your lease will get transferred if you wish to leave the space or your business shuts down. Typically, there are two structures for transferring a lease: assignment of the lease and subletting. 

Assignment of the lease refers to the fact that the complete lease is reassigned to a new tenant. Subletting happens when an existing tenant keeps their name on the lease but is given payment from the new tenant and then pays that money to the landlord. 

In both scenarios, you generally have to specify prior written consent before transferring the lease in the leasing agreement.

Personal Exposure: In a few cases, you may be needed to sign personal guarantees when you are leasing commercial space India. These contracts mean you’re personally on the hook for features of the lease even if your business defaults. Get legal counsel to negotiate this part of your agreement. If possible, you would only want your entity or legal business to take on the gamble when you’re signing a business lease. 

Holdover Rent: It essentially refers to a rent increase when the tenant continues to stay even after the lease has ended. For leasing office space Mumbai, a number of agreements, have a clause where it’s stated that, in these scenarios, businesses are accountable for up to 250% of their standard rent payment on a monthly basis. So, if you stay beyond your allotted time, it could cost you a lot of money. 

Non-disturbance Agreement: In numerous cases, if the landlord is not able to pay the mortgage on the property, the business will still be evicted, even if their making all of your payments, With a non-disturbance agreement, if this happens, you will be allowed to stay and continue paying whatever entity has seized control of the building from your landlord. 

In a nutshell, these are the five things you need to be aware of before you sign a lease agreement. Check out CRE Matrix, a leading real estate data analytics company India, which allows you to take a sneak peek at the lease agreement status and other details of numerous businesses across the country. 

For more such exciting analysis and details on real estate, visit our website www.crematrix.com.