How To Register For Leave And Licence Agreement In Mumbai
Mumbai is often called the city of dreams, where thousands of people come almost everyday from different parts of the country to fulfill their dreams and realise their ambitions. These aspiring individuals need to face a few hardships before they find a footing in the city and see their dreams come to reality. One of the main concerns for new entrepreneurs in Mumbai is finding a space for their business as well as residential property. Real estate prices are skyrocketing in Mumbai and it is infamous for lack of affordable property. Given such a scenario, it is close to impossible for a new entrepreneur to purchase an office in Mumbai. Same is the case with the new residents who are looking for an abode. Renting or leasing is the best solution to the rising real estate rates in Mumbai.
Renting or leasing has several other benefits, apart from being an economically viable option. These include-
- Renting a space, whether a commercial office space or a residential property, provides greater flexibility to the entrepreneur or the tenant when compared to purchasing the property. This means that the tenant is not attached to the property for a long term and has the flexibility to move out any time he wants.
- Purchasing a commercial or residential space, especially in a city like Mumbai, creates a huge financial burden. Renting, on the other hand, is relatively cheaper and the money saved can be put back into the business or used elsewhere.
- Owning a property can include taking care of a number of other responsibilities such as the maintenance, repairs, taxes, insurance and miscellaneous expenses made for the upkeep of the property. Renting a space is relatively simpler and rids the tenant from most of the responsibilities.
However, often property owners are wary of tenants misusing the property or shirking their basic responsibilities. Owing to this they are unwilling to lease out their commercial or residential spaces in Mumbai. But a simple document drafted by both the parties can help take care of this small hurdle. A Leave or Licence Agreement in Mumbai for the property can make the leasing process easier for both, the owner of the property as well as the tenant.
By drafting and registering for the Leave and Licence Agreement the landlord and the tenant procure legal rights. The Agreement helps set conditions on the occupant with respect to the use of the property, the term, the rent amount and other such conditions. The Leave and Licence Agreement also mentions several clauses, which eliminates any chance of dispute or disagreement between both the parties at any point in time. Both the parties are at ease and are aware of their rights and limitations.
Additionally, a Leave and Licence Agreement in Mumbai acts as an address proof which is accepted by various organisations.
Leave and license agreement in Mumbai
A Leave and License Agreement is an agreement wherein the licensor temporarily allows the licensee to use and occupy licensor’s immovable property, either full or a portion of it, for the purpose of carrying out business activity or for residential use. A Leave and Licence Agreement is also known as a Rent Agreement.
The Rent Agreement can also be described as a legal document that binds both the parties to their obligations and also provides rights to them. It gives the right of “occupying the property” to the tenant/lessee and the right to receive a mutually agreed “Rent” to the owner/lessor.
One important pointer to consider before entering into a Lease or Rent Agreement is that it is vital to decide the name of the business, finalise and form the business entity, such as a Sole Proprietorship or a Partnership Firm or a Company or LLP. This is because the Rent Agreement will be entered in the name of the business and details of the entity such as the type of entity, the address of the entity etc. also need to be mentioned in the Rent Agreement.
How To Draft The Leave And Licence Agreement?
- Drafting And Registering The Agreement
- The Leave and Licence Agreement in Mumbai can be drafted online by first viewing a sample copy. The legal experts at deAsra can help with the online drafting of the Rent Agreement.
- The next step is the registration of the Leave and Licence Agreement draft. The draft can be self registered online by visiting the site- https://efilingigr.maharashtra.gov.in/ereg/
- Apart from online application and registration, applicants can also visit the Registrar’s office in Mumbai to file for Registration of Leave and Licence Agreement.
- Alternatively, team experts such as those at deAsra can also help with the registration of the Agreement for any business or Agreement drafted for premises within the State of Maharashtra.
- Post the draft, the next step for the registration is to undergo a biometric and verification process. Since the form requires first for the applicant to login, create an id and fill in several forms,the preferred procedure is to register the Rent Agreement online via or with the help of third party experts such as deAsra.
- Documents Required
The documents required while drafting and registering for Lease and Licence Agreement in Mumbai are the same as those for any other place in Maharashtra and are listed here. The drafting of the Rent Agreement is the same throughout the country whereas the registering process is the same throughout the State.
- The address proof and identity proof of all the parties (PAN and Aadhar are mandatory)
- The address proof and ownership proof (e.g. Index II, electricity bill etc.) of the premises to be rented or given on lease.
- The passport size photograph of all the parties (only in the case of individuals).
- Based on the constitution of the business of the parties following additional documents are required:
- Partnership firm – Registered Partnership Deed
- Limited Liability Partnership (LLP) – LLP Agreement
- Private Limited Company, Public Company and OPC – Certificate of Incorporation, MOA and AOA, Board Resolution permitting the renting of premises
- Trust – Trust Deed
- Co-operative Society – Copy of by-laws
- The Agreement should be executed on a stamp paper of appropriate value.
- Information required
- The detailed address of the premises
- The details of the owner (s) of the premises (Address, name etc.)
- The details of the occupant, that is, the business occupying the premises on rent/lease (Name, address, etc).
- The duration of lease/rent
- The lease/rent amount
- The security deposit amount
- The identity proof and address proof of the owner(s)
- The PAN of the business (however in case of Proprietorship concern PAN of the Proprietor is sufficient)
- The identity proof and address proof of the representative(s) of the business (representative can be the proprietor, partner, or director)
- The address proof of the premises (Sale Deed or Index II)
- The passport size photos of the owner and representatives of the business
Features And Clauses of Leave and License Agreement
Businesses need to draft a Leave and Licence Agreement in Mumbai when leasing an office space. But before drawing the Agreement, entrepreneurs need to be aware of the Rent Agreement clauses and what each Clause implies.
- Clauses of the Rent Agreement
- Security Deposit
- Tenants in majority of the cities in India, including a big city like Mumbai, follow the practice of keeping some amount as a ‘Security Deposit’ with the lessor or owner of the property. This amount is generally ‘X’ number of times the monthly rent. However, the amount can be discussed between the parties.
- It is advisable to mention in the Agreement that in case the tenant/licensee defaults in payment of rent and/or damages the property, the owner/lessor has the right to recover such amount from the security deposit.
- Use Of Rented Property
- The purpose for which the property has been rented/leased should be specified in the Rent Agreement.
- Also, the clauses relating to quiet possession, surrender of property, etc should be included in the Agreement. Additionally, clauses relating to sublet and/or assign the property, as well as alterations in the property should also be included in the Agreement.
- Payment Of Rent
- The exact amount and the due date of payment of the rent should be mentioned in the Agreement. Which means whether the rent will be paid at the start of the month, that is, in advance, or paid after the month is over must be specified in the Agreement.
- Agreement Period
- The Agreement period is generally kept as 11 months and is mentioned in the Rent Agreement. In case there is any lock-in period, that should also be mentioned. The lock-in period is the date until which both the parties cannot terminate the Agreement unless otherwise specified in the Agreement.
- There can also be a provision that either party may terminate the Agreement upon prior written notice to the other party which must be mentioned in the Agreement.
- Maintenance Or Society Charges, Government Taxes Or Any Other Charges
- The Agreement should mention who will pay the monthly charges such as maintenance or society charges, parking charges, electricity charges, gas pipeline bill etc.
- Also, who will be liable to pay Property Tax or Municipal Tax must be mentioned in the Agreement.
- The responsibility of who will bear the cost of damage to the property should be mentioned in the Agreement.
- Renewal Of Agreement
- The provision for renewal should be made in the Leave and Licence Agreement.
- Dispute Resolution
- The place, governing law and mode of dispute resolution should be specified in the Leave and Licence Agreement.
- Security Deposit
- Clauses of the Rent Agreement
What If The Rent Agreement Is Not Registered?
The Leave and Licence Agreement is mandatory to register in Mumbai, especially if the tenure of the Agreement is more than a period of 12 months or a year. Agreements wherein the tenure is less than 12 months or a year is not mandatorily required to register. However, a Leave and Licence Agreement in Mumbai is recommended as it gives all the parties legal rights. Usually, the landlord is responsible for registering the document while tenants typically bear the monetary charges. If, however, both the parties do not register a Rent Agreement with the authorities, they are liable to pay a penalty which can be as high as ten times the original amount of registration.
The Rent Agreement is necessary as well as is a vital document that needs to be registered and the same can be done for Mumbai or elsewhere by deAsra Foundation.