11 Months Rent Agreement Rules

In this article, I will try to explain the concept of 11 months rental agreement, notary and registration process, required stamp duty, and other rules.

A lot of people have a misunderstanding that a Rental Agreement or Leave and License Agreement can be done only for the duration of 11 months. In fact, the Rental/Leave and License Agreement can be done for a maximum duration of 60 months.

Why do people choose 11 months duration –

In Section 17 of the Registration Act 1908, it is explained which documents should be registered compulsorily, subsection “d” states that leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent should be registered. Earlier, to avoid registration, people used to do 11 months duration agreement and get it notarized. But when it comes to registration of leave and license agreement the duration of up to 5 years is completely fine.

Pros and cons of 11 months Rental Agreement –

Pros –

1. Registration is optional,
2. Time-saving,
3. Convenient if the tenant and owner want the duration short.

Cons –

1. Need to renew the agreement after 11 months if parties want to extend the duration of the agreement,
2. Renewing the agreement attracts more expenses and inconvenience,
3. Probably owner demands rent increment after every 11 months,
4. If an agreement is not registered then it is hard to use as address proof.

Notary or Registration Rules of Rent Agreement –

It is necessary to register a rent / leave and license agreement when parties want to execute an agreement for a period of more than 11 months.

Parties can notarize the rent / leave and license agreement if it is made for a period of less than 12 months.

Stamp Duty & Registration Charges for 11 months Rental Agreement –

Stamp Duty and Registration charges for rental or leave and license agreement depend on the 4 factors, i.e. 1. Monthly rent/compensation, 2. Deposit amount, 3. Duration of the rental or leave and license agreement, and finally 4. Location of the property. Let’s check it one by one –

Monthly Rent or Compensation –

Stamp Duty is calculated on the total rent that the property owner receives. To be precise, 0.25% Stamp Duty is applicable on the total license fees (rent).

Deposit Amount –

Refundable deposit – Yearly Stamp Duty will be 0.25% on the 10% (approximately) of the total refundable deposit.

Non-refundable deposit – Stamp Duty of 0.25% on the total non-refundable deposit.

Duration of the Agreement –

While calculating the Stamp Duty, the duration of the rent or leave and license agreement shall be taken into consideration to calculate the total rent and yearly 10% of the refundable deposit.

Location of the Property –

Location is important to check the registration fees, Rs. 500/- Registration Fees will be applicable if the property is located in rural areas, and Rs. 1000/- Registration Fees will be applicable if the property is located in corporation areas.

Stamp Duty and Registration Charges calculation example –

Suppose the property is located in a corporation area, the monthly rent is Rs. 25,000/-, the refundable deposit is Rs. 75,000/-, and the duration of the agreement is 11 months. In this case, the Stamp Duty will be Rs. 704.70/- & Registration Charges will be Rs. 1000/-. And suppose the same agreement is done for the duration of 24 months then the Stamp Duty will be Rs. 1,537.50/- and the Registration Charges will be Rs. 1000/-. A citizen can calculate the Stamp Duty and Registration Fees by visiting – https://efilingigr.maharashtra.gov.in/ereg/

FAQ – Online Leave & License Agreement Registration