A property which is not put to use becomes a liability. Whether it is a car or a house, they all incur maintenance charge which should be paid. But if we put them to use and generate income, the same property becomes an asset.
Further, there is also no requirement of capital investment if we lease or rent the property.
Lease is a contract between the lessee (one who takes) and the lessor (one who gives) for the transfer of the property for a specified time period and a specified consideration as rentals. A lease at maximum can be of 99 years while the rental agreements have a varying range.
Before leasing out a property the lessor or the owner must do his part by getting done the police verification of the tenant. Whereas the tenant should also make sure that the Lessor is the true owner and that his title in not defective.
A rental agreement or a lease compels the parties to follow the terms of the agreement. Thus points to ponder while leasing out a property are
- Rental payment: It is to be decided beforehand about the amount that the lessee has to pay for the right over the leased or rented property. It should also contain about the quantum of increase in rent due to changing environment.
2. Date of payment: The payment date of the specified rent is to be decided in advance for any delay in the payment can be fined.
3. Duration of lease: The core of the agreement is the duration of the lease and it must be clearly stated in the agreement to prevent future conflicts between the tenant and the owner.
4. Maintenance: The agreement should specifically mention as to who will bear the maintenance costs of the leased or rented property to prevent any confusion in the future.
5. Information: The agreement should have a mention of the basic information about both the parties i.e. the lessee and the lessor like name, address, etc.
6. Expenses: It should be clearly stated as who is to bear the water bills, electricity bills and other such expenses.
Once the various legal aspects of the agreement are mutually agreed upon a legal agreement is carefully drafted with a mention of the decided terms and conditions by the lessor and the lessee. Non compliance of the agreement can result in legal consequences.