What Is A House Lease? Everything You Need To Know

Getting your Trinity Audio player ready...

What is a lease? It can be confusing to understand how leasing a house works. In simple terms, a lease is a contract that outlines the terms under which one party agrees to rent an asset. This asset is owned by another party. Thus a house lease is a contract under which a party agrees to rent a property that is owned by another party. It guarantees the lessee or tenant the use of the property. It guarantees the lessor who is the property owner or landlord, regular payments for the specified period of exchange.

A lease is legally binding. This means, that both the lessee and the lessor face consequences if they fail to uphold the terms of the contract. A lease is a form of incorporeal right. Residential or a house lease tends to be the same for all tenants. But there are several different types of commercial leases. 

The consequences of breaking a lease can range from mild to damaging, dependent upon circumstances. Let us explore some common questions that property owners have such as “should I lease my house?”, “how to calculate lease amount for a house in India?” etc.

Understanding a house lease

A lease is a legal and binding contract that sets the terms for a rental agreement, in real estate. This kind of contract stipulates the duties of each property to effect and maintain the agreement and can be enforced by both. 

A residential lease includes the following;

• address of the property
• Landlord responsibilities
• Tenant responsibilities
• Rent amount
• Security deposit details
• Rent due date
• Consequence in case of breach of contract
• Duration of lease
• Pet policies
• Any other essential information

House leases can be drafted up differently, but will most commonly have some similar features. Rent amount, due date of rent, expiration date are common in all residential leases. Both the landlord and tenant will need to sign the lease before occupation. This signifies that they both agree to the terms stipulated in the house lease.

Most residential leases are pretty standard and have the same terms for any tenant. Leases for commercial properties on the other hand are usually negotiated according to the specific lessee. 

An important point to note for both landlords and tenants: Keep a copy of the house lease for your personal records. This is helpful in case of any dispute.

Consequences of breaking a house lease

The consequence of breaking a lease can range from mild to damaging. The consequences are dependent on the circumstances under which a lease is broken. The most extreme circumstance is a tenant who breaks a lease without prior negotiation with the landlord. In such a situation, they might even face a civil lawsuit, a derogatory mark on their credit report or both. As a result of breaking the lease, they may even face problems renting a new residence as well as other issues.

However, if tenants give a certain amount of notice or forfeit the security deposit, there may be no further consequences. Some leases also have early termination clauses. These clauses allow tenants to terminate the contract under a specific set of conditions such as job-related relocation. 

Difference between a house lease and license

While lease and license are used interchangeably in renting parlance, they have some key differences. While a lease gives more rights to a tenant, a license is favorable to landlords. Under a lease, the tenant is granted exclusive possession of a property for a time period specified in the contract. A lease is defined under Section 105 of the Transfer of Property Act 1882. 

Whereas under a license, an owner permits another party to use their immovable property for certain purposes. It is the authorization to perform an action upon another person’s property without giving them the rights of possession. At any point during the contract, the owner can revoke the permission to stay. A license is defined under Section 52 of the Indian Easements Act 1882.

Difference between leasing and renting

A rent agreement can either be a lease or a license. Whether a tenancy could be executed through a license or a lease agreement is primarily decided by the tenancy period.  Note that the two arrangements are governed under different laws and thus, have varying characteristics. Rent agreements signed for an 11-month period fall under leave and license contracts and have no validity under the rent control laws.

Lease Duration

A lease agreement is made for extended periods, sometimes even up to five years, and extensions require a fresh agreement to be documented. Both are legally authorized and carry a great value when you need to contest a court case on the rights of occupancy or on any other issues relating to the said property.

Get a house lease to secure your house

House leases can prove instrumental to secure your house in the long run. It is also useful in effectively reducing house-related costs. Knowing what is house lease and how to acquire it is hence important in real estate. Various other legal formalities like house deeds are essential for one’s security. Buying one’s own apartment or flat, securing it, and decorating it to one’s heart’s content is a common dream we all share. Do also check out popular residential properties for sale in Kolkata like 4 BHK flats in Phoolbagan, residential flats near Joka metro, and 2 bhk flat in tangra!

FAQs