Lease Deed

What is a Lease Agreement?

A lease deed is a legal agreement between a landlord (lessor) and a tenant (lessee), where the landlord gives the tenant the right to use a property for a specific period, usually 12 months or more, in return for rent. Whether for residential or commercial purposes, a well-drafted lease deed provides security and legal enforceability.

If the lease term is more than 11 months, the lease deed must be registered under the law (e.g., the Registration Act in India). Registration makes the agreement legally valid and enforceable in court, and helps protect the rights of both parties.

Types of Properties Covered 

We assist with lease deeds for various residential and commercial properties, including: 

• Office spaces 
• Retail outlets and showrooms 
• Restaurants and cafés 
• Warehouses and godowns 
• Industrial and manufacturing units 
• Apartments
• Houses

Why Choose DigiLawyer to Draft Lease Agreement?

Need to draft an sublease deed? We make it simple - With DigiLawyer, you get help from real lawyers, strong legal documents, and quick delivery - all without leaving your home.

Clear Language

We draft your agreement in clear, simple, and formal language that effectively conveys your claim without legal jargon.

Quick and Hassle-Free

With just a few details from you, DigiLawyer generates precise agreement swiftly- no long waits, no confusing legal processes.

Confidential and Secure

Your information is handled with strict confidentiality and security, ensuring your sensitive financial disputes remain private.

Affordable Assistance

Get professionally lease agreement at a fraction of traditional legal costs- quality legal help that fits your budget.

How DigiLawyer Can Help?

Our team provides end-to-end assistance for drafting, reviewing, and registering lease deeds. We offer: 

What Should a Lease Deed Include? 

A comprehensive lease deed should contain the following key elements: 

1. Details of Parties: Full details of the lessor and lessee. 
2. Description of Property: Complete identification of the premises, including location, size, and boundaries. 
3. Lease Term: Commencement date, duration, and renewal provisions. 
4. Rent and Escalation Clause: Agreed rent amount, payment schedule, and annual or periodic escalation terms. 
5. Security Deposit: Amount, mode of payment, and refund conditions. 
6. Maintenance and Repairs: Allocation of responsibilities between the landlord and tenant. 
7. Permitted Use: Nature of business activity allowed on the premises. 
8. Sub-Leasing and Assignment: Conditions under which the lessee may sublet or assign rights. 
9. Lock-in Period: A fixed period during which neither party can terminate without penalty. 
10. Termination Clause: Grounds and procedure for early termination. 
11. Force Majeure: Protection in case of unforeseen events like natural disasters or pandemics. 
12. Dispute Resolution: Arbitration, mediation, or court jurisdiction for resolving disputes. 
13. Compliance: Adherence to applicable laws, including registration and stamp duty requirements. 

Lease Renewal and Termination Clauses 

These clauses play a vital role in maintaining flexibility and preventing disputes: 

• Renewal Clause: Clearly define the notice period, revised rent, and other terms for renewal. 
• Termination Clause: Outline conditions for early termination, required notice, and penalties, if any. 
• Lock-in Period: Specify consequences for breaching the lock-in commitment. 
• Force Majeure: Include relief provisions for situations beyond control. 

Why You Need a Professionally Drafted Lease Agreement?

A poorly drafted lease deed can lead to disputes, financial losses, and even litigation. Professional drafting ensures: 

• Legal Clarity: Clear definition of rights and obligations to avoid ambiguities. 
• Risk Mitigation: Proper allocation of risks, responsibilities, and penalties. 
• Compliance: Adherence to statutory requirements such as stamp duty and registration. 
• Business-Specific Clauses: Inclusion of special clauses like exclusivity, non-compete, and signage rights that protect business interests. 

Difference Between Residential and Commercial Lease Deeds 

While both types of lease deeds serve the fundamental purpose of granting possession for a specified time, there are significant differences: 

• Purpose of Use: Residential leases are intended for housing purposes, whereas commercial leases are used for offices, retail spaces, warehouses, and other business-related activities. 
• Regulatory Framework: Residential leases are often subject to rent control regulations, while commercial leases allow greater flexibility in negotiation. 
• Tenure and Rent Structure: Commercial leases typically have longer durations, structured escalation clauses, and may attract Goods and Services Tax (GST). 
• Security Deposit: The security deposit in commercial leases is generally higher due to the business risks involved. 
• Customization: Commercial leases often include additional provisions such as signage rights, maintenance obligations, and fit-out permissions. 

Important Things to Know Before Signing a Lease 

Before entering into a lease, ensure the following: 

• Title Verification: Confirm ownership and ensure there are no encumbrances on the property. 
• Zoning Compliance: Verify that the property is approved for the intended business activity. 
• Rent and Escalation Terms: Understand the rent review mechanism and lock-in period. 
• GST Applicability: Clarify responsibility for payment of GST on rent. 
• Termination and Renewal Provisions: Review exit options and renewal conditions. 
• Registration: Ensure the deed is registered and duly stamped to make it legally enforceable. 

What are the Grounds for Cancellation of Lease Deed? 

A lease deed may be cancelled under various circumstances: 

1. Mutual Agreement- Both parties can agree to terminate the lease before its expiry by executing a surrender deed or a cancellation deed. 
2. Breach of Conditions by Lessee or Lessor- Non-payment of rent, violation of use clauses, subletting without consent, or any material breach gives the lessor the right to terminate. 
3. Non-Performance/ Misrepresentation- If the lease was obtained by fraud, coercion, or misrepresentation, the aggrieved party may seek cancellation. 
4. Expiry of Term Without Renewal- On expiry of lease term, if not renewed, the lease naturally comes to an end. 
5. Forfeiture Under Section 111(g) of Transfer of Property Act- If the tenant breaks an important condition of the lease which clearly says the landlord can take back the property (forfeiture clause), then the landlord can cancel the lease and take back the property. But before doing this, the landlord must give a notice to the tenant. 
6. Destruction of Property- If the leased property is badly damaged or destroyed so that it can’t be used for the purpose it was rented for, then the tenant can end the lease. 
7. Court Decree/ Legal Action- A party can approach a civil court for cancellation or possession in case of default, fraud, or illegal occupation. 

Penalty for Non-Registration of Lease Deed 

The following are the penalties attracted by non-registering a lease deed- 

1. Unenforceability in Court

An unregistered lease deed for a term exceeding one year cannot be admitted as evidence in a court of law to prove the terms of lease (Section 49 of the Registration Act). Only collateral evidence (like payment of rent) may be considered, but the lease itself is treated as month-to-month tenancy. 

2. Loss of Legal Protection

The lessee loses certain legal protections, such as enforceable rights under the lease deed regarding duration, rent escalation, renewal clauses, etc. 

3. Stamp Duty and Penalties

Under the Indian Stamp Act (or the applicable State Stamp Act), insufficiently stamped or unregistered documents attract penalties. The penalty generally ranges from 2% per month of deficit stamp duty, subject to maximums prescribed under state law. 

4. Eviction Risk

Since the tenancy is considered month-to-month, the lessor can terminate it by serving a 15-day notice under Section 106 of the Transfer of Property Act. 

Frequently Asked Questions