Different Ways of Executing a Rent Agreement: Notarized and Registered

Are you interested in earning extra income from your house? If yes, then renting out your property is one of the most significant sources of income for a lot of Indians like you. This is more commonly seen in the case of elderly people who invest their life savings in buying a property and enjoy rental income throughout their entire retired life. However, when it comes to renting out real estate, it must be dealt with care and caution to avoid any hassles in the future. One such point that requires utmost care in executing a leave and License Agreement, i.e., a Rent Agreement while offering real estate on rent.

Rent Agreement is an official legal document that states the details of the real estate, the financial consideration involved and other terms and conditions linked with the property rental transaction. It is important to note that the terms and conditions stated in the Rent Agreement are binding on the tenant as well as the owner of the property or the landlord. 

Now, when we talk about executing a Rent Agreement, many people are unaware of the exact process. So, if you don't know much about the ways and want to know in detail, then this article is for you. Here, we will describe the different ways of executing a Rent Agreement along with highlighting the differences between the two.

Ways of executing a Rent Agreement

1. Notarized Agreement

A Notarized Agreement is a Rent Agreement printed on a stamp paper and signed by a Public Notary. In India, public notaries are generally advocates and lawyers. In the case of the Notarized Rent Agreement, the notary verifies the documents and identities of both the parties involved and endorses the document by signing it. In other words, we can say that the notary does not check the clauses and conditions of the rental agreement but only verifies the identity of the tenant and owner. For this process, both the owner of the property and the tenant have to be present before the notary. 

Executing a Notarized Agreement is much easier than a Registered one as it can flawlessly and quickly be done by simply visiting the office of the lawyer. Apart from that, it does not even require any registration fees or stamp duty to be paid. During this process, only a fee for the notary is charged by the lawyer that generally ranges from Rs. 200 to Rs. 500, depending upon the area where you live. 

However, one thing to note here is that, in case of any legal proceedings, the Notarized Agreement cannot be admissible in Court because this document does not validate the rental transaction. It only verifies the documents furnished along with the agreement. Also, it's important to note that, in India, there is no legal requirement to notarize a rent agreement. But in the absence of a Registered Agreement, a Notarized Agreement is asked for by multiple utility connections such as telephone, mobile, etc. 

This is all about a Notarized Agreement. Let's now move ahead and gain an understanding of the Registered Agreement. 

2. Registered Agreement

A Registered Rent Agreement is a Rent Agreement that is printed on a stamp paper and is registered with the sub-registrar of the area. It is somewhat similar to registering a sale deed of real estate. The process of registering the Registered Agreement can be done online or in-person by simply visiting the office of the sub-registrar. It requires both the tenant and owner to be present at the time of execution of the agreement. Only some states or cities provide the facility of online registration of such property-related documents. 

Unlike Notarized Agreement, the Registered Rent Agreement is admissible in the Court in case of any legal proceedings. In case the Rent Agreement is not registered, the provisions of the Rent Control Acts of the central as well as State Governments are not applicable. 

It is required to register a Rent Agreement if the rental period of the property is more than 11 months. In some states like Telangana, Andhra Pradesh, Maharashtra, and others, it is mandatory to register the Rent Agreement irrespective of the period of rent. While Registering a Rent Agreement, you are required to pay stamp duty and registration charges on the basis of the rental amount stated in the document. These charges differ from one state to another, and some states offer concession in stamp duty for women. 

As you have got to know the ways of executing Rent Agreement, let's now figure out the differences between the two, i.e., Notarized Vs. Registered Agreement.

Difference between Notarized and Registered Agreement

Based on a list of factors, the key differences between a Notarized and Registered Agreement are summarised below:

1. Cost

The cost of registering a Notarized Agreement is lower than a Registered Agreement. On the other hand, due to the applicability of stamp duty and registration charges, the cost of a Registered Agreement is higher.

2. Legal Status

Notarized Rent Agreement is not admissible in Court, whereas Registered Agreement is admissible in Court.

3. Mandate

Registration of Notarized Agreement is not compulsory. In contrast, the registration of the Registered Agreement is compulsory for a rental period above 11 months. 

4. Efforts Required

In the case of a Notarized Agreement, minimal efforts are required for procuring. On the other hand, in the case of a Registered Agreement, more efforts are required to execute as it requires visiting the sub-registrar's office. 

Frequently Asked Questions (FAQs)

1. What is a Rent Agreement?

A Rent Agreement is an authorized legal document that states all the required details of the real estate, monetary consideration, and other terms and conditions related to the property transaction. 

2. What are the different ways of executing a Rent Agreement?

The Rent Agreement can be executed in two ways that involve Notarized Rent Agreement and the Registered Rent Agreement. 

3. Is a Notarized Rent Agreement considered valid by the Court?

No, in case of any sort of legal dispute, the Notarized Rent Agreement is not acceptable in the Court because it does not authenticate the rental transaction. 

4. Is a Registered Rent Agreement considered valid by the Court?

Yes, in case of any sort of legal dispute, the Registered Rent Agreement is acceptable in the Court. 

Also read: Increase in Demand for Rental Property 2022