COMMERCIAL LEASE- LAW

DO LEASE TRANSACTIONS COME UNDER RERA

https://corporate.cyrilamarchandblogs.com/2019/07/lease-transactions-under-rera/

https://www.moneycontrol.com/news/business/real-estate/delhi-rera-makes-it-compulsory-to-
register-commercial-and-retail-real-estate-projects-being-built-to-lease-11308441.html

https://ksandk.com/real-estate/commercial-real-estate-leasing-in-india/

https://blog.ipleaders.in/commercial-lease-a-guide-for-tenants/

https://www.mondaq.com/india/landlord--tenant---leases/846434/indian-commercial-real-estate-
leases-points-to-ponder

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https://www.livelaw.in/law-firms/law-firm-articles-/model-tenancy-act-lease-rent-authority-
property-manager-176168

Commercial lease law in India is a complex and evolving field that deals with the
rights and obligations of landlords and tenants who use immovable property for
business or official purposes. There are various types of commercial leases, such as
term-based leases, master leases, subleases, net leases, gross leases, etc., that have
different implications for the parties involved. Some of the important aspects of
commercial lease law in India are:

 The legal framework: Commercial lease agreements are governed by the

Indian Contract Act, 1872, the Transfer of Property Act, 1882, the
Registration Act, 1908, the Indian Stamp Act, 1899, the Arbitration and
Conciliation Act, 1996, and any other applicable laws concerning specific
issues or matters. These laws regulate the formation, validity, performance,
breach, termination, and dispute resolution of commercial lease
contracts12.
 The agreement: A commercial lease agreement is a written contract that
records the terms and conditions agreed upon by the lessor (owner) and
the lessee (tenant) of the property. It should include details such as the
parties, the property, the term, the rent, the security deposit, the
maintenance charges, the usage of the property, the improvements, the
repairs, the damages, the termination clause, the dispute resolution clause,
 etc. The agreement should be clear, precise, and comprehensive to avoid
any ambiguity or confusion12.
 The registration and stamp duty: A commercial lease agreement is required
to be registered under the Registration Act, 1908, if it is for a term
exceeding 11 months. The registration fee varies from state to state and is
usually a percentage of the total rent payable for the term of the lease. A
commercial lease agreement is also subject to stamp duty under the Indian
Stamp Act, 1899, which is also different in each state and depends on
factors such as the value of the property, the rent amount, the term of the
lease, etc. The stamp duty and registration fee are usually borne by the
lessee or shared by both parties as per their mutual agreement1234.
 The rights and obligations: A commercial lease agreement creates certain
rights and obligations for both parties that must be complied with during
the term of the lease. Some of these are:
o The right to possession: The lessee has the right to possess and use
the property for the agreed purpose without any interference from
the lessor or any third party.
o The obligation to pay rent: The lessee has to pay rent to the lessor as
per the agreed amount and frequency. The rent may be subject to
revision or escalation as per the terms of the agreement.
o The obligation to maintain: The lessee has to maintain

Commercial courts jurisdiction - Realistic Realtors (P) Ltd. v. Karanpreet Singh

Walia, (2021) 4 HCC (Del) 368

Title: Commercial Lease Laws in India: An In-Depth Analysis

Introduction

Commercial leases play a pivotal role in the Indian real estate sector, serving as
the cornerstone of many businesses and ventures. These lease agreements,
whether for office spaces, retail outlets, or industrial properties, are governed by a
complex framework of laws and regulations. In this essay, we will delve into the
intricacies of commercial lease laws in India, exploring their evolution, key
provisions, legal requirements, and the challenges they pose for both landlords
and tenants.

## Historical Perspective

Commercial lease laws in India have evolved over time to reflect the changing
dynamics of the real estate market. The history of such lease arrangements can be
traced back to colonial-era land tenures, which laid the foundation for the present
legal framework. Post-independence, several legislations and acts have shaped
commercial lease laws, with the most significant being the Transfer of Property
Act, 1882.

## Key Provisions

### 1. Transfer of Property Act, 1882

The Transfer of Property Act, 1882, serves as the backbone of commercial lease
laws in India. It defines various aspects of lease agreements, including:

- **Lessor and Lessee**: The act specifies the roles and responsibilities of the
lessor (landlord) and lessee (tenant) in a commercial lease.

- **Lease Duration**: It outlines the permissible lease duration and renewal

provisions.
- **Rent and Security Deposit**: The act governs the determination of rent and
the collection of security deposits.

- **Repairs and Maintenance**: It defines the obligations of the landlord and

tenant regarding property maintenance and repairs.

- **Termination and Eviction**: The act outlines grounds for lease termination
and eviction procedures.

### 2. Rent Control Acts

Different states in India have their own Rent Control Acts, which regulate aspects
of commercial leases, including rent fixation, eviction, and dispute resolution.
These acts can vary significantly from one state to another, creating a complex
landscape for commercial landlords and tenants.

## Legal Requirements for Commercial Leases

### 1. Written Agreement

The first and foremost requirement for a commercial lease in India is a written
agreement. This agreement should clearly outline the terms and conditions of the
lease, including rent, duration, security deposit, maintenance responsibilities, and
dispute resolution mechanisms. Oral leases, while legally valid, are generally
discouraged due to the potential for disputes.

### 2. Registration
Commercial leases with a duration exceeding 12 months or involving significant
rent are required to be registered with the local sub-registrar office. Registration
adds legal validity and prevents fraudulent claims on the property.

### 3. Security Deposit

Landlords usually demand a security deposit from tenants to cover any unpaid
rent or property damage. The amount varies but is typically equivalent to a few
months' rent. The terms for refunding the deposit should be clearly stated in the
lease agreement.

### 4. Rent Control Laws

Compliance with state-specific rent control laws is crucial, as they dictate rent
fixation, eviction procedures, and other aspects of the lease. These laws aim to
strike a balance between the interests of landlords and tenants.

### 5. Eviction Laws

Eviction of a commercial tenant in India is a legally intricate process and must be

carried out in accordance with the law. Grounds for eviction can include non-
payment of rent, lease violation, or expiration of the lease term.

## Challenges and Controversies

While commercial lease laws in India provide a legal framework, they are not
without challenges and controversies:

### 1. Lengthy Legal Procedures

The legal procedures involved in eviction and dispute resolution can be protracted
and cumbersome, often favoring tenants. This can lead to landlords facing delays
in regaining possession of their property.

### 2. Ambiguity in Rent Control Laws

The variance in rent control laws across states creates confusion and
inconsistency. It can lead to disputes and complications when landlords and
tenants are subject to different regulations depending on their location.

### 3. Limited Legal Protections for Landlords

Some critics argue that commercial lease laws in India primarily protect tenants,
making it challenging for landlords to address issues such as non-payment of rent
or property misuse.

### 4. Lack of Standardization

Commercial lease agreements in India often lack standardization, leading to

ambiguities and disputes. Many agreements are heavily biased in favor of the
drafting party, adding to the complexity.
## Conclusion

Commercial lease laws in India are an essential aspect of the real estate sector,
governing the relationships between landlords and tenants. These laws have
evolved over time, primarily guided by the Transfer of Property Act, 1882, and
state-specific rent control acts. While they provide a legal framework, challenges
such as lengthy legal procedures, ambiguity in rent control laws, and limited legal
protections for landlords persist.

To foster a more transparent and equitable environment for commercial leases, it

is essential to streamline rent control laws, encourage standardized lease
agreements, and expedite legal procedures. Striking a balance between the
interests of landlords and tenants will be pivotal in ensuring the growth and
sustainability of the commercial real estate sector in India.