Here are the consequences you have if the lease is renewed for more than 11 months: If a property is rented for 24 months with a monthly rent of Rs20,000 for the first 12 months and Rs22,000 per month for the next 12 months. The registration fee of this agreement would be: 2% of the average rent for 12 months: Rs5.040, (average monthly rent is Rs21,000, average annual rent is 21000 – 12 and 2% is Rs5,040). In this particular case, the court also decided that the unreged agreement, even if it cannot be used as evidence in court, can nevertheless be used as evidence confirming (or supporting) the existence of a prior agreement. This means that such an unregant document cannot be admitted to court on its own, but it can still be valid for use as evidence. This is, of course, a legal distinction left to the discretion of the judge with respect to his claims to validity. Even in section 17 (d) of the Registration Act, there is a similar provision that a rental agreement or annual rent can only be valid if it is a registered instrument. If the term of the lease is increased to one year or more, the parties involved in the transaction must pay stamp duty and registration fees. Under Section 17 of the Registration Act, 1908, registration of real estate leases is mandatory from year to year or for a period in excess of or maintaining an annual rent. This section will therefore apply to one-year leases, which will significantly increase rental costs. In such cases, the tenant must bear stamp duty and registration fees. When a lease is established for a period of 12 months or more, it must be registered and, therefore, to avoid the lengthy process of registering the contract, most people are passed for 11-month agreements that are the threshold between the registration of the contract and the registration of a legally recognized document.
Data available with Makaan.com show that 21 percent of all homeowners who listed their properties for rent on the site expect their tenants to stay for at least a year. Why then are leases only signed for 11 months, one month less than one year? If you have ever rented a property or lived in a rented house, you must have signed a rental agreement. Have you ever wondered why most leases are valid for 11 months? Often, neither landlords nor tenants nor even real estate agents know why. Let`s see. Leases under the Indian Easements Act of 1882 as vacation and licensing contracts for an 11-month period are not valid under rent control laws. Rent control laws, which differ from state to state, have under their control all leases concluded for a period of at least one year.