Renting out property comes with its set of challenges, such as scouting for the right tenant, safeguarding the property, accounting for the damages and maintenance, and ensuring timely payments. If you are considering renting out your property, then here is a checklist to help you expedite the process.

DOCUMENTATION IS ESSENTIAL
Property consultant Jayesh Vyas explains that any legal document which records the agreement between you, the owner/landlord, and your tenant, needs to be well defined. “Each property has its unique and distinct features, therefore there is no one-sizefits-all approach to documentation. So, enlist a lawyer who can ready the documents, and a property consultant to get it registered,” says Vyas.

The agreement that records the transaction needs to identify who the parties are, determine the timeline and quantum of rent, and outline the tenant’s rights and responsibilities during the tenure.

Vyas adds that one should be extremely thorough while getting the property transaction documented. “Being safe and legally compliant means ensuring the transaction and its terms and conditions are documented and registered the right way,” he adds. Financial consultant Ranjana Patole explains that for an investor, there are two main aspects: the rent period (after which the tenant should vacate the premises) and the monthly rent amount. “The document needs to define who will bear the statutory charges, like monthly maintenance, in case of a flat in a co-operative housing society; or if there is a clubhouse, can the tenant utilise the facilities, and other such issues. Ensure police verification is done and a no-objection certificate is procured from the housing society before you hand over possession of your house,” she points out.

DEFINE RESPONSIBILITIES
Evaluate the condition of the property when renting it out. Also, identify who will pay for any major repairs and maintenance. While the owner may take care of minor repairs, major repair works, if caused as a result of the tenant’s usage, will definitely impact the return on investment (RoI). Which is why, it is important to clarify if the cost of any major repair work will be borne by the landlord or the tenant.

IDENTIFY PAYMENT TERMS
This needs to be specified in detail—bank transfer or postdated cheques, date of payment, etc. To avoid any misunderstanding, both parties must arrive at a mutually agreed payment arrangement.

HIRE A PROPERTY CONSULTANT
Dealing through a property consultant offers many advantages. Lawrence Shetty, president of a real estate consultants’ association, says, “The professionals ease the process of finding the right tenant. The services they provide include documentation and tenant verification— while some may find these services a tad expensive, the process becomes hassle-free and less time consuming,” he adds.

DETAILS OF FURNISHINGS
List out, in detail, the furniture and fixtures that are housed within the property. This is required in case there’s any damage caused by the tenant, as it enables the owner to levy penalties/charges. Before handing over the property to the tenant, check the condition of the walls, flooring and ceiling/roof to avoid any disputes in case of any damage in the future.

SECURITY DEPOSIT AND RENT INCREASE
Tenants are required to pay a security deposit that maybe adjusted against any rental defaults or other charges payable under the agreement. A landlord may ask for this as a preventive charge for any possible damage to the property. The deposit is returned to the tenant at the end of the lease. It is also an accepted practice to increase the rent annually, and this is stated in the document.

SUBLETTING OR SHARING THE PREMISES
A leave and license agreement also needs to specify if the tenant can sublet or share the tenancy with others. If not indicated, this can create complications. Take for instance, the case of HR consultant Basant Lakhotia who recently leased his warehouse in Thane to a friend, who then sublet the property to another party. Since then, Lakhotia has been involved in a legal dispute with his original tenant, who isn’t the occupant as he is subletting it. Lakhotia explains, “If you rent out your flat to a single individual, there is a possibility that the tenant may take on subtenants to share the rental amount. The responsibilities defined on part of the tenant may not be followed by the sub-tenants, so in case of any damage to the premises, holding the tenant accountable needs to be factored in the leave and license agreement.”

On a final note, Lakhotia stresses that every property transaction has legal ramifications, which makes it even more pertinent to ensure appropriate legal advice is sought and the document is registered.

Source: Times Property (https://bit.ly/3Hew9hK)