Legalities! Ever wondered why rent agreement is done for 11 months?

It's essential to note that while 11-month agreements offer some benefits, they also have drawbacks.

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Sonia Dham
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What is Rent agreement? It is legal agreement which is signed between the owner of the property and person who intends to take possession of the property temporarily. The rental agreement includes term of the rental and amount for that particular term. In some regions, particularly in India, rental agreements are often structured for 11 months primarily to avoid the complexities and formalities associated with longer-term leases. Here are some reasons why this practice is common:

Stamp Duty: In many places, including India, rental agreements longer than 11 months are subject to stamp duty, which is a tax levied on legal documents. By keeping the agreement to 11 months or less, individuals can avoid or minimize this expense.

Legal Formalities: Longer-term leases often require more legal documentation and procedures. By opting for an 11-month agreement, both parties can bypass some of these formalities, making the process quicker and more straightforward.

Flexibility: Both landlords and tenants may prefer shorter-term agreements for flexibility. Landlords might want the option to adjust rental rates more frequently or to terminate the agreement if they wish to sell the property or use it for personal purposes. Tenants may prefer shorter commitments to have the flexibility to move if their circumstances change.

Eviction Procedures: In some jurisdictions, eviction procedures for tenants become more complex for agreements exceeding a certain duration. Shorter agreements simplify the process if eviction becomes necessary.

Market Dynamics: In some rental markets, especially those with high demand and fluctuating rental rates, shorter agreements allow landlords to adjust rents more frequently to match market conditions.

However, it's essential to note that while 11-month agreements offer some benefits, they also have drawbacks. For example, tenants may find themselves needing to renegotiate terms frequently, and landlords may face higher turnover rates, leading to potential periods of vacancy. Additionally, longer-term security and stability may be compromised with shorter agreements.