The lease agreement is the most important legal document when renting or leasing a property, whether commercial or residential. It includes specifying terms such as rental tenure, monthly rental, the responsibilities of each party, the duration of the lease, and notice requirements in case either party want to terminate the contract. It also sets the obligations and conditions for use of the property between landlord and tenant..
A lease agreement typically also specifies certain limitations on the tenant’s use such as prohibiting specific activity on the property or requiring that tenant provide written notice before building anything on-premises. All details are usually explicitly spelled out in advance to avoid any confusion or disagreements later on in the engagement tenure.
Below are the essential / critical inclusions in a lease agreement:
Rental Details: Stating the rental fee in the agreement will avoid any confusion for the lessee to decide whether the property is within the price range of their budget. Moreover, it also included the specified time for due dates on rentals as this will help in avoiding any delays in payment.
Lease Tenure & Lockin Period: The duration of the lease term determines how long a lessee will occupy space, While the Lockin Period is the duration for which neither Party is entitled to exit the lease. Commercial office leases are typically for nine years, with Lockin Period varying from 1-3 years.
Security Deposit: Security Deposit is an interest free refundable deposit that is paid by the lessee once the lease starts, in case of later default on rentals or major repair at the time of vacating premises. The terms of refund of the security deposit must be clearly specified in the Lease Agreement.
Maintenance & Repairs: : Typically, the tenant is responsible for minor repairs within the property, with major reparis being in the developer/property owner’s scope. Common Area Maintenance (CAM) lies within the property owner’s scope, but is chargeable on a monthly basis from the tenant / lessee. A well drafted Lease Agreement should clearly demarcate scope of responsibility for either side.
Force Majeure & Dispute Resolution: This is an often overlooked but critical aspect of a Lease Agreement. A good agreement must specify the course of action available to either Party in case of Acts of God or general unavailability of the premises due to conditions beyond the control of either Party. Similarly, it should clearly spell out whether disputes are to be resolved via the competent courts or arbitration, the jurisdiction of the same and other related terms.
There are four important reasons why signing a lease agreement is the right thing to do:
- It formalizes your agreement with the property owner.
- It guarantees your occupancy rights responsibilities.
- It clarifies for both sides the crux of the lease agreement- security deposits, monthyl rent, escalation, conditions for breach of contract, etc.
- If anything changes during the term of your lease- say for example your business needs more space or less space- then both parties know what needs to happen in order to change the terms of the contract.
Executing the Lease in Chandigarh
With the formalisation and professionalisation of the office leasing market, verbal contracts and unregistered leases are fast becoming a thing of the past. If you are renting office space in Chandigarh it is essential that the lease should be registered with the Registrar Office in Sector 17, for the safety of the property owner as well as the tenants rights of usage.