Bangalore Real Estate Trends

The draft landlord-tenant agreement safeguards the interests of both parties Ashish Gupta

Disputes between tenants and landlords have often ended up in courts.

The issue may be related to vacation of premises or increase in rent. Recently, the Supreme Court drafted a model landlord-tenant agreement.

The Supreme Court stated that in most landlord-tenant disputes there was no written contract and the tenant took advantage of the situation because of the slow process of rent control laws and the process involved in eviction. It found tenants occupying a property paying rent at a rate determined 20-25 years ago. It noted that half the landlord-tenant disputes would not have reached the courts if the tenants agreed to pay rent at the market rate.

The model draft promises tenants five years of peaceful stay in the premises. However, this is subject to certain preconditions. It is not an absolute right to stay on. There are certain conditions, subject to which a tenant can have a five-year stay. One major condition is that the tenant needs to pay rent at the market rate. Further, the rent needs to be increased by 10 percent every three years. Moreover, the tenant is responsible for payment of property tax for the house. The model agreement directs tenants to pay every charge accrued on the house to enable the landlord get the rentals without any deduction.

According to the model, in case the present and prevalent market rent assessed and fixed between the parties is paid by the tenant, the landlord will not be entitled to bring any action for eviction at least for a period of five years. As a result, a tenant has immunity from being evicted from the premises for five years.

According to the Supreme Court, adherence to these guidelines will bring down litigations considerably. This judgment will not affect a tenancy governed by existing lease deeds or specific contracts between landlords and tenants.

According to the judgment, a tenant must enhance the rent according to the terms of the agreement or at least by 10 percent after every three years. If the rent is too low in comparison with the market rent, having been fixed almost 20 to 25 years ago, the present market rate should be worked out.

It should be determined either on the basis of a valuation report or reliable estimates of rentals in the surrounding areas let-out recently. The rent should be just, proper and adequate, and be fixed keeping in mind the location of the property, type of construction, accessibility from the main road, availability of parking space etc.

Apart from the rentals, property tax, water charge, maintenance charges, electricity charges for the actual consumption of the tenanted premises and for common area is payable by the tenant, so the landlord gets the actual rent out of which nothing should be deductible.

Minor repairs of the premises should be carried out by the tenant from his own pocket. He should not u n d e r t a k e any major repairs , r e q u i r i n g reimbursement, without prior permission from the l a n d l o r d . Major repairs should be carried out only after obtaining permission from the landlord in writing before hand. The modalities with regard to adjustment of the amount spent there would have to be worked out between the parties. So, the responsibility of 'usual maintenance' of the premises is on the tenant while the onus of major repairs is on the landlord.

So, a landlord cannot evict a tenant for at least five years if he has paid the rent regularly according to the agreement between the two parties. If the present and prevalent market rent as assessed and fixed between the parties is being paid by the tenant, the landlord will not be entitled to take any action for his eviction at least for a period of five years.

_{Source: TimesProperty Dt: 20-5-2011}