Protecting property: Before you decide to let

Dec 01 2012, 10:27 IST
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There are instances of litigations especially due to the lack of safeguards on the part of the owners while renting out properties. There are instances of litigations especially due to the lack of safeguards on the part of the owners while renting out properties.
SummaryRental segment of residential realty space is picking up with growing demand.

for such flat is because one, he does not have to spend anything on amenities and secondly, he gets better life style by just paying a marginal increase. Usually people prefer to pay more for the furnished flats instead of raw ones even if they are available at cheaper rents, says Krishna Pande, an Mumbai-based broker who specialises in rental deals.

The Paperwork

The services of local real estate agents are preferable to advertisements in newspapers or websites. The broker gives human face to the deal and acts as a mediator for the entire process. He gets potential customers through his database or brokers network.

The selection is based mainly on location and rent. He will inform you of the prevailing market rates and may correct your asking price if need be. He usually charges one month rent as his brokerage. However, if the same party or licensee continues to extend the stay, the brokerage can be reduced to half of that amount.

The broker may assist you in negotiations, rent finalisation as well as deposit amount, confirming the mode and period of payment, finding the antecedents of the customer, execution of agreement, registration, and police verification. For owners with spare flats that have to be regularly rented out, having a fixed broker is usually beneficial as renewals are regular and in some cases, brokers can be appointed on monopoly basis or sole-renting arrangements. Further, brokers themselves advertise the property through newspapers and websites and their expertise would be invaluable in evaluating the prospects.

When finalising a rental transaction, one comes across three types of legal documents: rental agreement, lease deed and leave and licence agreement. One of the three is executed when a property is given on rent. However, the three types of documents are different in their objectives, but are used interchangeably, which is incorrect.

When a flat is given on a period of 11 months or less, it is governed under the leave and licence agreement. There is no transfer of interest, only permission is granted to stay on the property.

The draft of leave and license agreement is also available on the various websites but there is always something more specific about that particular flat or the owner or the deal which needs to be added to the agreement and that is where the legal expert comes in.

If the tenure is more than 11 months then registration

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