What is a Notarised Rent Agreement?
A notarized rent agreement can be defined as a below written document stamped with the seal of a notary which is formed on a stamp paper. Though it is not made mandatory to approve such a notarized rent agreement in the court of law or to get such a document duly registered with the relevant sub-registrar office, it yet has its own perks. The foremost one being that such a document remains legally enforceable and valid as evidence in the eyes of the law in a court of law. Notarization hints towards the fact that both of the parties have willingly given their consent to all the terms and conditions , especially when the two parties are not personally present in front of an authorised body during an agreement. In instances where a landlord who lives in a different city wants to enter into a long term agreement with an individual who may be a tenant in his property, this type of rental agreement comes in handy. A notarized rent agreement template can be obtained online and later customized.
Advantages of a Notarised Rent Agreement
It is possible for landlords to draft standard rent agreements, but when it comes to the case of drafting customized agreements, it is always wise to get it registered and notarized. This is also valid in the case of tenants as well. However, the whole purpose of notarized rent agreement is served only when it remains valid and legal abiding by the laws of the state. With a notarized rent agreement, it is feasible for landlords to file litigation in case of tenant’s failure to pay the rent in time or damages done to the property besides other issues. Blatantly speaking, it substantiates the interests of both the landlord as well as the tenant.
Here are some of the advantages of getting rent agreement notarized:
Protects both parties
Saves you from paying consideration amount in advance
Increased Loan Chances
Documentation
Good rapport with your tenant
Tenant safety
Defensive approach
Safeguarding the deeds and foreclosure
Avoids disputes
Assures tenant’s good intentions
Avoids tax problems
Difference between Notarized rent agreement and registered rent agreement
All rent agreements need to get registered under Registration Act 1908. For this both tenants and landlords need to provide all their details as well as witness. The given facts may be from the side of landlord or tenant. Once both parties provide the details, the magistrate will verify all the documents and duly register the rent agreement. In countries like India, landlords and tenants have to comply with Stamp duty Act, 1899. As a result, they have to pay proper stamp duty appropriate with the property.
How to Notarise a Rent Agreement
To have a rent agreement registered, it is mandatory to notarise the same. The process for notarising the rent agreement is mentioned below:
STEP 1
The rent agreement should be printed on an appropriate stamp paper. The value of the stamp paper depends on the period for which the rent agreement is being notarised. For example, if you are getting your rent agreement notarised for a period of 11 months, then you need a stamp paper of Rs. 100/- (at current market value).
STEP 2
If the parties were not present at the time of execution of the rent agreement by the Notary, then a signed and duly filled Notary Form for the same must be acquired.
STEP 3
The Notary should then put his or her seal in the Agreement. It is mandatory for the Notary to mention the date of notarisation, copy of his or her Notary ID number and name as well as the seal showing the Notary ID Number and the state from where the Notary is registered.
STEP 4
Finally, the Notary will sign at the designated place in the Agreement.
It is important to mention that the Notary has fiscal charges that he may incur for providing his services. However, the Notary is wholly entitled to recover those charges from the party seeking the notarisation of the rent agreement. Also note that the Notary is under obligation to provide his services at the rates as specified under the Notaries Act, 1952.
Regulatory Requirements for Notarized Rent Agreements
Independent of regional variations or legal interpretations, there are some fundamental standards that must be met by notarized rent agreements in order for them to be considered legally binding. Those include:
Parties to the agreement
It is important that the rightful parties sign and attest to the notarized rent agreement. Indeed, landlords and tenants who do not sign the agreement will be unable to enforce the terms. To further validate notarized rent agreements, any company or corporation must also be registered with the appropriate governing bodies.
Property address
The property that is being rented must be clearly and accurately listed, along with contact information for the resident manager, landlord or both. Much like a house address, the property listed must have a standard address, such as a street number, block number or intersection. Common land markers such as a well, barn, creek or the like will not be accepted by a court. The property address should also be listed on any accompanying identification that is used to validate the notarized rent agreement.
Duration for which property will be rented
Notarized rent agreements will list the date upon which the lease begins and the date upon which the lease ends. However, the duration of the lease can also be listed as a short-term agreement (such as a week-to-week or month-to-month commitment) or a long-term agreement (such as a one-year, five-year or permanent lease). The type of rent agreement, whether short-term or long-term, should be made clear to all parties involved. Any rent agreement that has a duration of a year or more will require notarized signatures.
Payment amount
The rent outlay should clearly be stated, including when it is due, the duration of the rent period (e.g. whether it is due monthly or weekly) and what kind of payment is required (e.g. cash, check, money order, etc.). The date on which rent is due should also be listed, and the tenant should be able to file a complaint if it is not received on time. Both the landlord and the tenant should receive a copy of the notarized rent agreement directly from the notary.
Frequently Committed Errors in Notarised Rent Agreements
When creating a notarized rent agreement, it’s important to avoid the following common mistakes:
- Failure to Register: A notarized rent agreement is valid for six months only if it is not registered with the Sub-Registrar and if the rent is less than INR 3500/- per month. If the rent is more than INR 3500/- per month and the agreement is unregistered, then it will be enforceable for only 11 months. So you should register the rent agreement within 4 months of its execution.
- Incorrect Stamp Duty: Notarized rent agreement is not subject to any stamp duty. There are several states in India where the rules change. For example, in Karnataka, an agreement under which the rent is paid monthly is liable for payment of stamp duty at 0.50% of the average rent for three years in addition to non-judicial stamp duty of INR 20/-.
- Non-inclusion of Terms and Conditions of Tenancy: See the list below of the terms and conditions that a rent agreement must have:
- The names of the parties (landlord and tenant)
- Area of the property
- Purpose for which it is rented
- Rent amount, mode of payment
- Due date for rent payment
- Name of the person to whom the rent is to be paid
- Duration of the tenancy
- Date of possession of the property by the tenant
- Renewal of the agreement, if any
- Additional terms related to the tenancy
- Incorrect details about the rent and tenant: It is very important to check the correctness of the name, address, telephone number, personal particulars, and residence status of the tenant. See the list below of information that must be checked before going ahead with the tenancy:
- Full name of tenant
- Address of tenant
- Telephone number of the tenant
- Personal details (residential status) of tenant
- Whether the tenant has provided identity proof, passport size photograph
- Verification of tenant’s source of income
Believe it or not, there are still people who go ahead with tenancy without ensuring that the above is checked . I have even had clients who were not aware of the above information.
- Improper Name-sequence: You will be surprised to know that most of the people who walk into my office do not remember their father’s or mother’s name or their eldest brother’s or sister’s name. The children of such people usually do not remember their own grandfather’s name. It is also common to see that agreements are signed just by using initial(s) of the first name of the parties. It is easy and convenient to sign documents in this manner. However, in many cases, this caused legal problems when the party takes the other party to court. For example, when you sign only initial(s) of your first name(s), your full name will not be mentioned in the documents. You will have no proof of the fact that your name is written wrongly in the Agreement. For example, if your name is Ramesh Chand, then your name should be mentioned in the agreement either as – "Ramesh Chand X" or "Ramesh Chand Y". The "X" or "Y" represents that you also have an initial before your first name. You should also mention your surname. If you don’t mention your surname, your father’s or mother’s name may be used as a surname. This may cause a lot of legal problems to you.
- Handwritten portions: It is is best to mention the name of the tenant and the rent in figures and words.
- Inconsistent Pagination: Please make sure that all pages have initials of the parties. It is also ideal to affix the rubber stamp of the parties on each page.
- Signature of Witness/Notary: In Maharashtra State, it is mandatory to affix impression of rubber stamps on the agreement along with notarization.
Registered vs Notarised Rent Agreement: 10 Differences
A notarized rent agreement is a lease/rent agreement that is documented on a non-judicial stamp paper and signed in the presence of a Notary public. A Notary Public is a specially authorized individual who has the legal authority to serve as a witness to the acceptance and execution of a document.
A notarized rent agreement in effect serves the same purpose as a registered rent agreement, however, it does not provide the same legal strength, especially in a dispute in court of law. In the eyes of the landlord and the tenant, a notarized rent agreement is considered an informal agreement.
A notarized rent agreement in the possession of the landlord is good enough for him to make an application to the Rent Controller for eviction of the tenant on the ground that he has not paid the rent regularly, or violated any of the terms and conditions mentioned in the agreement.
Some of the advantages and disadvantages of a notarized rent agreement are briefly explained here:
Advantages
Disadvantages
Notarized rent agreements are preferred for its benefits. Occurrence of a dispute between the landlord and a tenant is usually rare. However, in cases of a dispute, the Notary Public can be summoned to record his deposition if the original agreement has been destroyed or damaged. The Notary Public can also become a witness if there is a conflict regarding the period discussed and agreed upon during the signing of the notarized rent agreement.
Notarized rent agreements are useful in cases where registration of the rent agreement becomes unnecessary and cumbersome due to the nature of the lessor or the Lessor. In cases of kabuliyatname, the tenant can seek the services of a Notary Public in the absence of a lessor. Notarized rent agreements offer a greater degree of flexibility and are relatively quicker and easier than registering the contract.
Registered rent agreements have the same validity as an agreement that is executed on plain paper. It is sufficient evidence to enforce the payment of rent, eviction of a tenant, if the tenant refuses to vacate the premises, etc. A rent agreement executed on plain paper is not valid if the value of the property is more than INR 100.
Some of the advantages and disadvantages of a registered rent agreement are briefly explained here:
Advantages
Disadvantages
The process of registering a rent agreement is expensive in terms of the fee, stamp duty, and other ancillary costs involved in the registration process. Further, in a registered rent agreement, the rent can only be increased at the end of the period for which the agreement is valid. On the other hand, a notarized rent agreement allows the rent to be increased in midterm, in case the landlord intends to do so, without any difficulty.
FAQs on Notarised Rent Agreements
Here are some of the most common questions and misunderstanding people have regarding notarized rent agreements.
Will a rent agreement on plain paper notarized by a Notary Public have legal value? Several people got caught in a case where the tenant refused to vacate and his lawyer argued that the rent agreement on plain paper notarized by a Notary Public is not valid. Remember in the eyes of law, only the rent agreement that is executed on stamp paper which is registered with the Rent Controller is a valid document. However, the Supreme Court has held that documents executed on plain paper and notarized are valid documents. But in such cases , you need to prove that the demised premises is vacant and is not covered under the provisions of the rent control act for which purpose you will have to file an application to declare the premises vacant under Section 104 of the Evidence Act 1872, or in a suit to seek permission from the court to deposit rent in the name of the plaintiff/landlord.
If I prepare a rental agreement on plain paper and have it notarized, will it be legally valid? Though a document on plain paper and notarized has been held to be sufficient by the Supreme Court, the landlord will have to prove that the document is properly proved, and moreover, will have to file an application under Section 104 of the Indian Evidence Act 1872. Hence, it is not recommended to execute a rent agreement on plain paper and have the same notarized.