Is an agreement valid without notary?

Notarized or Registered Rent Agreement - Which is Better?Updated: Jul 27, 2022, 17:00 IST By: Pawni MishraPrint ShareTable of ContentsDifferent Ways of Executing a Rent AgreementNo

Is an agreement valid without notary?

Notarized or Registered Rent Agreement - Which is Better?Updated: Jul 27, 2022, 17:00 IST By: Pawni MishraPrint

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Table of Contents

  • Different Ways of Executing a Rent Agreement
  • Notarized Agreement
  • Advantages of a Notarized Agreement
  • Why Make a Notarized Rent Agreement?
  • Registered Agreement
  • Advantages of a Registered Rent Agreement
  • What Details Should be In Rent Agreement?
  • Sample of Registered Rent Agreement
  • Essential Documents for a Registered Rent Agreement
  • Agreements Which Should Be Notarized
  • Agreement Which Should Be Registered
  • How to Create a Notarized Rent Agreement Online?
  • How to Create a Registered Rent Agreement Online?
  • State-Wise Stamp Duty and Registration Charges
  • Notarized v/s Registered Agreement
  • Wrapping Up: Notarized or Registered Rent Agreement

Renting out a property is one of the major income sources for many Indians, especially the elderly, who invest their life savings in buying a property and enjoy the rental income throughout their retired life. However, letting (renting) out a property must be dealt with utmost care and caution to avoid any hassles in the future. One such point of caution is executing a Leave and License agreement (or simply rent agreement) while giving property on rent. It is compulsory to have a rent agreement either registered or notarized if the lease is of more than 11 months. However, the agreement can be ignored if the property is given on rent for less than 11 months.

A rent agreement is a legal document that mentions the details of the property, the financial consideration, and other terms and conditions associated with the property rental transaction. The terms and conditions mentioned in this rental agreement bind the tenant and the landlord (owner).

Different Ways of Executing a Rent Agreement

There are two ways to execute a rent agreement.

Notarized Agreement

A notarized rent agreement is simply a rent agreement printed on a stamp paper that a Public Notary signs. In India, public notaries are majorly lawyers and advocates.

In the case of a notarized agreement, the notary verifies both parties' identities and documents and endorses the document by signing it. The parties (owner and tenant) must present before the notary for this process.

Executing a notarized agreement is much simpler than a registered one as it can be done by just visiting the lawyers office and does not require any stamp duty and registration fees to be paid. The lawyer charges only a fee for a notary, usually ranging from Rs 200 to Rs 500 as per the locality.

However, it is to be noted that in case of any legal proceedings, the notarized agreement cannot be admissible in the Court, as it does not validate the rental transaction. It just verifies the documents furnished along with the agreement.

Nevertheless, there is no legal requirement to notarize a rent agreement in India. But in the absence of a registered agreement, a notarized agreement is asked for by various utility connections such as cooking gas, telephone, mobile, etc.

Advantages of a Notarized Agreement

Following are the advantages of a Notarized rent agreement:-

  • Easy to execute: It is easy to execute the notarized agreement; all you have to do is visit the lawyers office.
  • No stamp charges applicable: Stamp charges are not applicable on a notarized agreement. A notary fee is applicable, which varies between Rs 200-500.
  • Witness document: Notarized document also acts as a witness to the agreement.
  • Minimises theft and fraud: There are fewer chances of document theft and fraud.
  • Genuine: The stamped document serves as a real and genuine document.

Why Make a Notarized Rent Agreement?

One has to make a notarized rent agreement under the following conditions:

  • When you require the agreement urgently or on an immediate basis
  • If the rental period is 11 months or less
  • A notarized rent agreement is made for mutual understanding between a landlord and a tenant. The document is meant to authenticate the identities of the parties involved (landlord and tenant).

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Registered Agreement

A registered rent agreement is a rent agreement printed on a stamp paper and registered with the sub-registrar of the area. It is very similar to registering a sale deed of a property. The registration process can be done online or in person by visiting the sub-registrars office. Some cities/ states offer the facility of online registration of such documents.

Unlike a notarized agreement, the registered rent agreement is admissible in the Court in case of any legal proceedings. The provisions of the Rent Control Acts of the central government and various state governments are not applicable if the rent agreement is not registered.

It is required to register a rent agreement if the rental period is more than 11 months. In some states, including Maharashtra, Telangana, and Andhra Pradesh, it is compulsory to register the rent agreement irrespective of the rental period.

Registering a rent agreement requires paying stamp duty and registration charges based on the rental amount mentioned in the document. These charges vary from state to state, and some offer concessions in stamp duty to women.

Advantages of aRegistered Rent Agreement

Following are the advantages of a registered rent agreement:-

  • Verified: Registered rent agreement is thoroughly verified by the Registrar or Sub Registrar of the office.
  • Admissible in court: As per the Registration Act, 1908, a registered agreement is admissible in a court of law. It also provides a sense of security to the owners.

What Details Should be In Rent Agreement?

One should have the following basic details in the rent agreement:-

  • Tenants name, address, contact details
  • Landlords name, address, contact details
  • Property address which is leased
  • Security deposit amount, maintenance charges and monthly rent
  • The annual increase in rent amount, both the parties should agree to renew the contract
  • Penalty amount, if rent is paid late or disruptive behaviour
  • Lock in period
  • Term of contract
  • Grounds for contract termination

Sample of Registered Rent Agreement

Registered rental agreement sample

Sample of the registered rental agreement
Source: Legal Desk



Also Read: Rental Agreement Registration

Essential Documents for a Registered Rent Agreement

You require the following documents for a registered rent agreement:

  • The original proof/evidence of ownership or title of the property
  • Original ID evidence or proof of the property ownership or title of the property
  • Legal documents like the property's tax receipt or Index II
  • Two photographs of each of the parties involved and One photo of each of the witnesses
  • An address proof copy of the parties and the witnesses - Aadhaar Card, Driving License, Ration Card, Voter ID, or Bank Passbook
  • A copy of the property's route map

Agreements Which Should Be Notarized

The documents which should be notarized are:-

  • Partnership Deed
  • Power of Attorney
  • General Will

Agreement Which Should Be Registered

The documents which should be registered are:-

  • Sale deed of land or building
  • Rent Agreement
  • Other real estate documents

How to Create a Notarized Rent Agreement Online?

You can create a notarized rent agreement online in three easy steps:

Step 1: Fill out a pre-approved template with all the required information

Step 2: Attach a copy of your Aadhaar Card along with one more identity proof such as your PAN Card, Voter ID, Driver's License or Passport Copy

Step 3: Make the payment, including the service charges (depending on the locality)

After completing these steps, you will receive a soft copy of the agreement in your email.

How to Create a Registered Rent Agreement Online?

Step 1: Fill out all the essential details (of the landlord and tenant) in the pre-defined legal template

Step 2: Attach a copy of your Aadhaar Card along with additional ID proof such as your PAN Card, Voter ID, Driver's License or Passport Copy

Step 3: Complete the online payment, which includes nominal charges for stamp duty, registration and other service charges

Step 4:After the agreement is approved, the service provider will initiate legal formalities. You will receive the registered rent agreement on your doorstep within a few days.

State-Wise Stamp Duty and Registration Charges

Stamp Duty and Registration fees charged by some of the states in India as of June 2022 are as follows:

State

Rental Period

Stamp Duty (% of the Consideration Value)

Registration Charges

Maharashtra (Mumbai)*

Up to 60 months

5-6%

Rs 30,000 for properties above Rs 30 lakh and 1% below Rs 30 lakh

Karnataka

< 1 year

2%-5%

1% of property value

Delhi

< 5 years

3-6%

1% of property value

5 < 10 years

5%-6%

Rajasthan

< 1 year

0.02% of market value of the property

20% of the Stamp Duty amount

1 < 5 years

0.1% of market value of the property

5 < 10 years

0.5% of market value of the property

10 < 15 years

1% of market value of the property

15 < 20 years

2% of market value of the property

20 < 30 years

4% of market value of the property

> 30 years

6% of market value of the property

(3-5% for females as per category)

1% of the market value of the property

The Consideration Value refers to the average annual rent payable. Some states also include the advance/ deposit collected by the landlord in the Consideration Value

*Maharashtra: The Consideration Value refers to the sum of the total rent payable during the rental period and the non-refundable deposit collected by the landlord. Urban areas refer to areas under Municipal Corporation limits. All other areas come under rural areas.

*Karnataka: The Consideration Value for lease period more than 30 years depends on the locality, property area, amenities in the property, and various other factors. The stamp duty amount mentioned is an indicative figure for a mid-range 1,000 sqft house in the Electronic City area in Bengaluru.

Even though a registered agreement entails a lot of security to the tenant as well as the landlord, it is a common practice in India just to furnish a notarized agreement rather than a registered agreement as it saves the cost, time, and hassles as in the case of registering the agreement. However, it is highly advisable to execute a registered rent agreement to safeguard the interest of both the parties against any legal compliance and malpractices by the tenant or the owner.

Notarized v/s Registered Agreement

Key differences between a notarized and a registered agreement summarized:

Factor

Notarized Agreement

Registered Agreement

Legal status

Not admissible in Court

Admissible in Court

Cost

Lower than registered agreement

High. Stamp duty and registration charges are applicable

Efforts required

Minimal efforts are required

More efforts are required to execute, as it requires visiting the Sub-registrar

Mandate

Not compulsory

Compulsory for a rental period above 11 months

Wrapping Up: Notarized or Registered Rent Agreement

When you rent a property, it is advised to have a rent agreement. You can get a rent agreement made in two different ways: a notarized agreement and a registered rent agreement. It is easy to make these agreements; you can visit the lawyer or SROs office for an agreement. However, a registered rent agreement holds utmost importance because the Registrar thoroughly verifies it and is also permissible in a court of law.

You may also visit here for more information on home loans, repayments, documentation, rent agreements, tenant verification, etc.

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Notarized v/s Registered Rent Agreement

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6 Platforms to Pay Rent

Frequently asked questions

What is a rent agreement?

A rent agreement is an authorized or legal document that cites all the required details of the property, the monetary consideration, along with other terms and conditions related with the property rent transaction.

What are the different ways of executing a rent agreement?

Rent agreement can be executed in two ways that are notarized rent agreement and registered rent agreement.

What is the difference between notary and registered rent agreement?

Notarized rent agreement is attested by the Public Notary approved by the government, while the registered agreement is prepared at the office of sub-registrar by paying stamp duty & registration charges.

Do a notarized rent agreement valid before the court?

No, in case of any legal dispute, the notarized agreement is not acceptable in the court since it does not authenticate the rental transaction.Share

TagsReal Estate Legal Rent Noida Faridabad Gurgaon Greater Noida Ghaziabad New Delhi Ahmedabad Kolkata Hyderabad Chennai PuneTagsReal Estate Legal Rent Noida Faridabad Gurgaon Greater Noida Ghaziabad New Delhi Ahmedabad Kolkata Hyderabad Chennai PuneCommentsWrite Comment Please answer this simple math question.

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