Lease deed is a legal contract whereby an owner (lessor) lets out immovable property to a tenant (lessee) for a fixed term, fixed rent, and conditions. It protects both sides if it goes wrong for them later.
🛠️ Step-by-Step: How to Prepare a Lease Deed
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1. Decide on the basics of the deal
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Agree verbally or by email/WhatsApp like this to:
- Who are the parties (owner and tenant)
- Property address and exact area to be leased
- Rent amount, security deposit and when is rent due
- Term of a lease (months/years) and when it starts
- Who pays utilities, property tax, repairs, maintenance
- Special restrictions (pets, subletting, commercial use, etc.)
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2. Do due diligence (very important)
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Buyer/Tenant: - Ask the seller for proof of title, the latest sale deed, an encumbrance certificate, a property tax receipt, and ID proof.
Owner: Tenant by checking ID, proof of income/employment, and references.
Flats: check society NOC or building rules about renting; for commercial, check Zoning/land-use permissions. -
3. Prepare a draft lease deed
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Either:
- Use a lawyer/advocate (recommended for long/commercial leases), or
- Use a clear template and fill in details (fine for short residential leases).
Typing draft must be clear and legible, along with including all key clauses (see list below).
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4. Decide stamp duty & registration
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Stamp duty is required on the lease instrument, and the rates/method (total rent or annual rent basis) vary by state.
Registration: Generally in India, leases for more than a year will need to be registered at the sub-registrar. (If in doubt, always check with local state rules.).
Pay stamp duty BEFORE signing (or according to local practice). Schedule the appointment at the sub-registrar if the registration is required. -
5. Signatures & witnesses
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Both parties sign the final deed in the presence of two witnesses (witnesses should sign and give their addresses).
If registration is required, parties (or their authorised POAs) must appear for registration with identity proofs. -
6. Register it (if required)
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Visit the local Sub-Registrar Office with original documents, IDs, stamp duty receipts and witnesses.
Registrar will record/register the deed and return a stamped/registered copy. Keep the original registered copy safe. -
7. Handover & inventory
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An inventory/condition report (photos + meter readings) signed by both sides created on the possession day. Tenant pays the security deposit and the first month’s rent as agreed.
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8. Keep copies & notify
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Registered original copy and at least one copy each with the lessor and lessee should be kept. Local municipal/utility bodies can be notified if there is a requirement by a tenant (water/gas/electric connections).
✅ Essential clauses to include (must-have)
- Parties (names, addresses, PAN/Aadhaar)
- Property details (address, boundaries, floor/flat no.)
- Term (start date, duration, extension/renewal terms)
- Rent & mode of payment (due date, late fee)
- Security deposit (amount, conditions for refund, interest)
- Use of property (residential/commercial and prohibitions)
- Maintenance & repairs (who pays what; routine vs major repairs)
- Utilities & taxes (who pays property tax, electricity, water, society charges)
- Alterations & subletting (allowed only with written permission?)
- Termination & notice period (how either party can terminate, notice length)
- Breach & remedies (penalties, eviction steps, forfeiture of deposit)
- Force majeure (what happens in lockdowns, natural calamities)
- Indemnity & liability (who is responsible for third-party claims)
- Dispute resolution & jurisdiction (arbitration or court; city jurisdiction)
- Registration & stamp duty clause (who bears cost)
- Signatures & witness details
📑 Documentation Check List
Owner (Lessor)
- Original Sale Deed / Title Deed
- Latest Encumbrance Certificate (EC)
- Property Tax receipt/electricity bill
- ID proof (Aadhaar / PAN) and address proof
- Society NOC (for flats) or owner’s board resolution (if company)
Tenant (Lessee)
- ID & address proof (Aadhaar / Passport / Voter ID)
- PAN (for rent > above certain threshold)
- Passport-size photos
- Employment proof/salary slips (if landlord asks)
- Previous landlord reference (optional)
For registration
- Stamp Duty Receipt/e-stamp certificate
- Two witnesses' ID proofs
- PoA if any party not physically present
Typical Timeline
- Negotiation & due diligence: 1-7 days
- Drafting & review: 2-5 days (longer for complex/commercial)
- Stamp duty payment & registration appointment: 1-14 days depending on local office
- Handover & inventory: day of possession
💡 Practical Tips
- Always verify the owner title before payment of deposit.
- Do not hand over large amounts without a signed agreement (at least token advance + receipt).
- Require written consent for all structural alterations.
- Avoid verbal promises – get every concession in writing.
- Instruct the advocate at all times for long/commercial leases or high value.
- Query pending mortgages/loans on property (as mentioned in Encumbrance Certificate)
- Hold meter reading & photos to solve later disputes.
⚖️ Above all Conditions hiring a lawyer
- Commercial lease or long-term (5+ years)
- High-value security deposits/high rents
- Very complicated title history or multiple ownerships
- When a PoA is used in place of the owner appearing in person
Sample Short Clause Examples (You Could Copy/Modify)
Rent clause: "The tenant shall pay rent of ₹_____ per month in advance on or before the 5th day of each month to the landlord's bank account ______. Late payment shall attract interest of ___% per month."
Security deposit clause: "Tenant shall deposit ₹_____ as security. Landlord shall refund the deposit within 30 days of vacation after adjustment for lawful dues and damages."
Termination clause: "Either party may terminate by giving _____ months' written notice. On breach, the landlord may forfeit the deposit and re-enter the premises after _____ days' notice."
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