Want a conflict-free rent agreement? Know these clauses for landlords and tenants

Rent agreement clauses for landlord, tenant: When a house is rented, the landlord and tenant sign an agreement outlining their duties and responsibilities. Both parties aim to include clauses to protect their interests, though they may not include all desired clauses. However, certain clauses should be added to ensure mutual protection and minimise future disagreements.
To prevent future disputes, here's how landlords and tenants can create a rent agreement that safeguards their interests, as listed by ET:
Landlord protection clauses
Landlords should ensure the inclusion of the following clauses in the rent agreement:
Timely payment of rent and utilities: The agreement should outline the tenant's obligation to pay rent and utility charges on time. It should also detail the consequences of late payments, including the landlord's right to deduct from the security deposit.
Defined property usage: Terms and conditions regarding property usage should be clearly stated. This includes prohibiting permanent improvements or renovations without the landlord's consent, to avoid potential legal issues with municipal authorities. Additionally, landlords may request periodic inspections to ensure compliance with this clause.
Tenant protection clauses
Here are additional clauses that should be considered for inclusion in the rent agreement:
1. Landlord's financial obligations: Tenants should ensure that the landlord's financial obligations are clearly outlined in the agreement. This encompasses responsibilities such as paying property taxes and house insurance.
Manmeet Kaur, Partner, Karanjawala & Co says that the rent agreement should include a commitment from the landlord confirming that all relevant charges, including electricity, water, and maintenance fees, have been settled or will be covered by the landlord before the agreement begins.
2. Security deposit: Mani Gupta, Partner, Sarthak Associates and Solicitors says tenants should ensure clarity on the process for refunding the security deposit upon termination or expiry of the rent agreement. Typically, the amount of the security deposit is stated in the agreement. Kaur highlights the importance of including clauses specifying the conditions under which the security deposit may be withheld and the timeline for its return upon lease termination. Such clauses help prevent arbitrary withholding of the security deposit.
3. Furnished apartments: Nowadays, landlords may offer semi-furnished or fully furnished apartments. It's crucial to include a comprehensive list and photographs of the utilities or fixtures provided by the landlord in the agreement.
Kaur was quoted saying that this step reduces the likelihood of disputes regarding the number and condition of utilities at the lease's end. It also prevents disagreements over deduction or withholding the security deposit. The agreement should confirm that the utilities and fixtures provided by the landlord are in working condition. Additionally, it should specify that tenants are only responsible for substantial loss or damage, not normal wear and tear of these items.
4. Lease renewal and rent increase: The agreement should detail the process for renewing the lease and specify any rent increases. Kaur warns against clauses allowing unspecified rent increases, as they may lead to disproportionate hikes imposed by the landlord.
5. Expense deduction from rent: Suresh Palav, Partner at IndiaLaw LLP, advises tenants to include a clause in the rent agreement stipulating that if the landlord fails to perform necessary repair work, the tenant can deduct the repair costs from the rent.
6. Peaceful possession and usage: The tenant should ensure that the rent agreement guarantees them peaceful possession of the house throughout the duration of the lease.
Mutually beneficial clauses
1. Lease tenure: Clearly specify the duration of the lease to avoid confusion or disputes regarding the end date.
2. Termination conditions: The rent agreement should clearly outline the conditions under which termination is possible, with both landlord and tenant mutually agreeing on these circumstances. Additionally, Kaur mentions that the agreement must specify a notice period required for lease termination, ensuring it's the same for both parties.
3. Dispute resolution: The tenant and landlord should include a clause in the agreement outlining alternative dispute resolution methods such as mediation and arbitration. Gupta stresses the importance of a robust and efficient mechanism for dispute resolution. Kaur adds that this clause should also specify the location for resolving disputes to ensure convenience for both parties.
Qualities of a good rent agreement
Palav was quoted as suggesting, “A good agreement should accord a balance of rights between both the landlord and the tenant which simultaneously protects the right of the landlord to recover his possession and also the right of the tenant for a fair rent and recovery of his deposit.”
Prashanth Shivadass, Partner, Shivadass & Shivadass Law Chambers suggests that a good rent agreement should prioritize mediation over litigation. Despite the Supreme Court allowing arbitration for tenancy agreements, many landlords and tenants struggle to resolve disputes amicably, leading to unnecessary pressure on the courts.
Gupta from Sarthak Associates and Solicitors, further recommends that a good rent agreement should be written on a stamp paper of sufficient value and registered, especially for leases lasting more than 11 months or upon parties' request. Key terms to include are the leased property's details, rent and charges, security deposit and its return conditions, permitted use of the property, lease duration, termination conditions, handing over procedures, and dispute resolution methods.