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Thursday, 27 March 2014

Registration of Lease Deed


Mandatory to pay stamp duty on lease deeds/agreements. Registration for 1 year or more is mandatory under section  107 of Transfer of Property Act, 1882 and section 17 of Registration Act, 1908.
Consequences of  Deficient Stamping/Non-registration
Lease deed/agreement can be impounded and penalty upto 10 times  of the unpaid deficient stamp duty amount can be charged by the Collector of Stamps.
An unregistered and/or deficient  stamped lease deed/rent agreement is not admissible as evidence in court of law.
In the event of an unregistered lease deed that requires mandatory registration, the courts have termed  the tenancy (for residential as well as  commercial properties) to be a month to month tenancy, terminable on a 15 days notice, by either of the parties. This means that the lessee cannot enforce the agreed lease period on the lessor.
The lessor also faces various disadvantages as the terms and conditions of the lease deed are not admissible, for lock in period, if any, on the lessee.