Renting a residential property is very easy than renting a commercial property such as a shop for rent. It includes lots of factors such as higher rents, larger spaces, and higher agent fees, leading to higher investments. As we know, the residential agreements are made for 11 months only, but in the case of commercial agreements, those are done for a much longer duration as they are B2B or B2C.
There are too many complications involved in this, so one needs to be more thorough before selecting the best-suited property for them. One must be acquainted with the local laws and all the necessary documents related to real estate dealing.
The real estate industry is facing heavy competition in India from the inside, which is why the rent agreements must be worked properly. You must be aware of the right question that you will be asking if needed and about all the laws that will be appropriate for your business.
Understanding these laws will aid you in avoiding costly mistakes and saving your money. Under the transfer of property act, all the retail space for rent deals is accounted for.
A process where the property is rented for commercial purposes is a commercial renting agreement. This involves an office, an industry, commercial buildings, and a shop for rent. This commercial renting agreement doesn’t have any standard or required form like other contracts. The party can use any form as long as the basic component is present in the renting agreement.
The steps for renting commercial property
Validation of ownership title
Just make sure that you have the entire details of the ownership of the property, and to authenticate the rent, you must have access to the title deed. Inspect to confirm that there is no sub-rent or any other form of rent linked with the property before making any agreement with the landlord.
Certified Plans and Power of Attorney (PoA)
If you are renting a property that is a half-constructed building, always check the title deed and commencement certificate issued by the related authority. For leasing the commercial space in industrial property, you must check the occupation certificate. It is very important to check and confirm whether there is any power of attorney included in the case of indirect rent.
Proper renting agreement
Before making any mutual commitment with the property owner, ensure that the renting agreement is based on proper operations. Make a specific deal about the rent’s nature, whether it may be a rental lease agreement or retail space for rent.
Income Tax & Mortgage verification
It is always recommended to check the income tax background of the landowner in case of commercial agreement to ensure whether the owner has any illegal proceedings or pending disputes in his name. This will also provide you confirmation of whether the property is characterized under the income tax act as residential or commercial property. If there is any doubt in this classification, you may be charged a TDS in the future.
Background check of the property negotiator
It is essential to have a background check of the property negotiator before taking his services. You can gather information about the negotiator from the past rent agreements or from local contracts who know about the agent and his background. Ask the agent to give you all the details about his past clients. By contacting his clients, you can identify whether he is a fraud or not by their reviews.
The validity of your renting agreement
A commercial rent agreement must refer to the following basic information in addition to other articles:
- Starting and ending dates.
- The address of the property.
- The rental charge and complete information of all deposits.
- The intermission of payment.
- The rent renewal provision.
- Names of all the involved parties, as well as their signatures.
- The names of the landowner and residents and any other parties involved with their signatures.
In the case of co-working space contracts, check that the working time is mentioned else; increasing them in the future may be a monotonous process.
Registration And Stamp Duty
The Transfer of Property Act commands that rent activities for a time period that is more than one year must be registered.
Consequences of non-registration of lease deeds
Rents of non-registration for more than one year are considered a serious offence. It doesn’t create any rights among the tenants and landlords. It is not valid to produce in front of the court for needing registration either. Under stamping a document is forgivable; non-registration makes the document disallowed as evidence.
From the above post, you can find all the vital steps and procedures involved in renting a commercial space that you must follow before renting one.