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Will your rent agreement remain valid if landlord sells the property?


New Delhi: What if the flat in which you are living on rent (with an 11-month rent agreement) is sold to a new buyer by your landlord just after two months? Will your rent agreement remain valid for the next nine months or will you have to get a new rent agreement made with the new purchaser on new terms and conditions, probably also pay a higher rent?

In this piece, we will try and understand the circumstances in which a tenant can protect his rights while living in a rented house.

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Unless the rent agreement stipulates an express provision for its termination upon the transfer of tenancy by the landlord, the 11-month rent agreement assures payment of the same rent irrespective of change in the landlord, said experts at Shardul Amarchand Mangaldas & Co.

However, if certain clauses are not mentioned in your rental agreement, you will probably need to execute a new rent agreement with the new purchaser of the property in which you are staying on rent. Harsh Parikh, partner at Khaitan & Co, said, “You need to keep in mind that such rent agreements should have adequate clauses to state that in case the licensor (landlord) desires to sell the flat, it would be subject to the rights of the licensee (tenant) under the rent agreement and that the new purchaser would execute a new agreement with the tenant on the same terms and conditions as the existing rental agreement.”

In other words, it means that the current rent agreement continues to remain valid and it depends on the new purchaser and tenant whether or not they wish to re-execute a fresh rent tenancy agreement on the same terms and conditions.

“You ought to also consider that the security deposit you have paid to the licensor is transferred to the new purchaser as it would then be the obligation of the new purchaser to refund the security deposit on expiry of the rent agreement,” said Parikh.

It is, thus, important to read and understand the clauses mentioned in your rental agreement because if there is a provision for termination of rent agreement on the transfer of tenancy by the landlord, then you might have to face trouble wherein as per the new agreement you might have to pay higher rent all of a sudden.

Things a tenant should remember before taking a house on rent/ lease.

Verification of property

One should duly verify before taking a house on rent that the person offering the house is the rightful owner of the house. This can be done by checking the record of society concerning details of the owner or by contacting neighbours of the area.

Utility Bills are cleared

“Before signing the lease, kindly ensure that all previous utility bills such as electricity, water, maintenance charges of society are paid up to date by seeking a copy of the last paid bills from the landlord,” said Neha Gupta, principal associate, Athena Legal.

Availability of essentials

The tenant, whether living individually or with family, should duly verify that all the essential services such as medical, bank/ ATM, market, are within the close vicinity of the house so that in case of emergency one can avail all services readily.

No brokerage houses

Gupta said, “One should approach houses which are offered on rent directly by the landlord so that all details about the house and other requirements such as water, electricity, gas pipeline, servant/maid etc. can be understood from the landlord itself and wrong information generally given by a broker and brokerage charges can be avoided.”

Security check

It is of utmost important to ensure that the house is safe to stay in every manner and hence the tenant should check if the house is duly guarded and is in gated colony/society and the door has proper locks and all entrances to the house are properly sealed or has grills so that any incident of theft can be avoided in future.

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