Legal Framework of Tenancy in India: Laws, Rights and Dispute Resolution
Introduction
Renting a home or any commercial space is a way of livelihood for many people in our nation. Tenancy shapes our way of living, whether it's a family renting a house, a student leasing a tiny flat, or any other arrangement. However, we will learn about what tenancy means and how it works in this blog. Tenancy is more than just a signed agreement; it involves a legal relationship governed by rights, responsibilities, and laws.
- Residential Tenancy: The most common type of tenancy is a Residential tenancy. In it, individuals rent homes or apartments for living. Rent agreements govern it. State Rent Control Acts apply to this type of tenancy.
- Commercial Tenancy: This type includes renting stores, offices, or any other location for business or commercial purposes. The Transfer of Property Act governs these leases.
What is Tenancy?
Tenancy is a legal arrangement in which the property owner allows another person to use their property, land, house, shop, or apartment for a specified period in exchange for consideration, typically in the form of money. The owner is referred to as the landlord, and the user is referred to as the tenant. Tenancy is not just about paying rent. It is a contract that balances the landlord's right to their property with the tenant's right to use it peacefully. In this arrangement, both sides have rules to follow. Tenancy is governed by the following.
- State-specific Rent Control Acts: These regulate rent, eviction, and tenant protections (e.g., Delhi Rent Control Act, 1958).
- Model Tenancy Act, 2021: A central law aimed at modernizing tenancy laws, although its adoption varies by state.
Difference Between a Tenancy and a Lease
- Under the Transfer of Property Act, 1882, a lease is a formal transfer of the right to enjoy immovable property. It is for a fixed period, with consideration, which shall be paid periodically. It is a more structured and properly formulated agreement with specific terms regarding transfer, subletting, and renewal.
- A tenancy, on the other hand, describes the occupation of property, frequently in a less formal way. Although it typically occurs under a lease, informal or oral agreements can also give rise to it. Local rent control laws regulate tenancies, whereas leases are clearly defined in the Transfer of Property Act. Tenancy laws provide additional protections for tenants.
- The primary difference lies in the formal aspect, duration, and specific rights of transfer in leases compared to tenancies, which are centered on the right to occupy.
Types of Tenancy
- Agricultural Tenancy: It is another common form of tenancy in rural India. This involves leasing farmland for cultivation. It is regulated by state-specific laws (e.g., Karnataka Land Reforms Act, 1961). These tenancies often grant tenants strong protections, such as the right to continue farming.
- Pagdi System: It may sound unfamiliar to those who don't live in cities like Jaipur. This is an outdated system, also known as a traditional tenancy arrangement, where tenants pay a lump sum to the landlord and a nominal rent.
- Leave and License: Well, it is not a form of true tenancy. It is permission to use the property without transferring ownership rights. It is pertinent to mention here that any agreement or contract is made as per the provisions of the Indian Contract Act, 1881; whereas, the explicit provisions of and for 'licence' are provided under sections 52 to 64 of the Indian Easements Act, 1882.
Rights and Obligations of Landlords and Tenants
- Rights of the Landlord
- He shall receive the agreed rent on time.
- He has the right to reclaim possession after the tenancy ends or if the tenant breaches the terms of the agreement (e.g., non-payment of the rent).
- He shall inspect the property periodically and verify if any maintenance is required.
- He can increase rent as per the agreement or state laws.
- Duties of the Landlord
- He shall ensure that a habitable property is provided. It shall have a proper source and supply of water, electricity, and structural safety, too.
- The landlord should not interfere with the tenant's peaceful enjoyment of the property.
- The landlord must follow eviction procedures legally and should not forcibly evict tenants.
- Rights of the Tenant
- Tenant has the right to use the premises peacefully without interference.
- He has the right to demand essential repairs from the landlord.
- He is eligible to seek protection from arbitrary eviction under the Rent Control Acts or the Model Tenancy Act.
- Duties of a Tenant
- He must pay rent on time and maintain the property.
- He should use the property only for the agreed purpose and not for any other purpose.
- He shall be duty-bound to inform the landlord of significant damage or needed repairs.
- He shall peacefully vacate the property upon the expiration of the tenancy.
Common Tenancy Disputes
- Non-Payment of Rent: If a tenant fails to pay rent, the landlord can issue a notice. If the issue remains unresolved, then they can file for eviction under the specific state laws and section 114 of the Transfer of Property Act.
- Eviction Disputes: Evictions that are not properly made and are illegal are subject to dispute. Rent Control Acts and the Model Tenancy Act, 2021, require landlords to prove grounds, such as non-payment by the tenant, misuse, or any other legitimate cause.
- Rent Hikes: An unreasonable rent increase sparks conflicts. State Rent Control Acts cap increases (e.g., 10% is increased annually in some states).
- Property Maintenance: Disputes over repair costs are common. Section 108 of the Transfer of Property Act deals with the rights and liabilities of the lessor and lessee. Chapter IV of the Model Tenancy Act, 2021, deals with the rights and obligations of landlord and tenant.
Resolution Methods
- Negotiation: Many disputes can be settled through dialogue, such as agreeing on the cost of repair.
- Rent Control Authorities: State Rent Control Acts establish tribunals or controllers to handle disputes (e.g., Delhi's Rent Controller).
- Civil Courts: Parties can file lawsuits for eviction, rent recovery, or injunctions in complex matters.
- ADR: The court may refer the matter to an alternative dispute resolution (ADR) mechanism under section 89 of the Code of Civil Procedure, 1908. It offers a faster resolution.
- The Model Tenancy Act, 2021
- One crucial piece of legislation that attempts to reform India's tenancy system is the Model Tenancy Act, 2021.
- It makes it mandatory for the agreements to be in written format and registered with the Rent Authorities.
- It offers fast-track dispute resolution through Rent Courts and Tribunals.
- It protects against arbitrary evictions and arbitrary rent hikes.
- However, it is a model law; states are required to enact it. Tamil Nadu and Uttar Pradesh are among the states that have begun to implement it. Older Rent Control Acts are used in other states.
Conclusion
The tenancy is a delicate subject as it involves only contractual dealings between the landlord and the tenant. Disputes also vary from residential to commercial. There are numerous challenges, including disputes over rent, evictions, and repairs. One can navigate everything about tenancy smoothly if they have proper awareness of the laws, rights, and duties. Some issues are resolved in the first stage if there is adequate documentation and a clear understanding of liabilities and rights. For legal assistance, contact us.
