What Tenants Should Check Before Signing a Lease Agreement | Sirf Broker

Most tenants spend more time negotiating the rent than reading the document they are about to sign.

That is a problem, because the lease agreement is not a formality. It is a legally binding contract that defines every aspect of the tenancy: what is permitted, what is not, who is responsible for what, and what happens when something goes wrong.

In Indian rental transactions, lease agreements are frequently treated as a quick step between finding the property and moving in. The tenant is excited to have found something within budget. The owner wants the paperwork done and the tenant inside. The broker wants the deal closed. And in that collective hurry, the document gets signed without being properly read — or without the tenant knowing what to look for.

The consequences show up later.

A security deposit that the owner refuses to return. A maintenance clause that makes the tenant responsible for repairs that should not be theirs. A lock-in period that traps them in a flat they need to vacate. A rent escalation clause that was never mentioned verbally. A notice period that requires two months, when the tenant assumed one.

None of these is unavoidable. All of them are in the document — if the tenant reads it. And all of them are preventable — if the broker explains what to look for before the signature happens.

This guide covers everything a tenant should check before signing a lease agreement in India. It applies to residential rentals, commercial tenancies, and the leave and licence agreements that are the most common format in urban India today.

1. Understand What Kind of Agreement You Are Signing

Before reading the contents, a tenant should understand which type of rental agreement they are being asked to sign, because not all rental documents work the same way.

The main rental agreement types in India:

The distinction matters because leave and licence agreements are specifically designed to make it easier for the owner to recover possession at the end of the term. Lease deeds give the tenant stronger legal rights — which is why many residential owners in India prefer the leave and licence format.

A tenant who signs a lease deed thinking it is a leave and licence — or vice versa — may be in a different legal position than they expected if a dispute arises.

Registration requirement: In most Indian states, leave and licence agreements for a period exceeding 11 months must be registered. An unregistered agreement has limited enforceability. Always confirm whether the agreement will be registered — and who bears the stamp duty and registration cost.

2. Verify the Owner’s Identity and Right to Rent

This is a step that almost no tenant thinks to take — and one that protects against a surprisingly common problem.

In Indian cities, properties are sometimes rented by people who are not the actual owners. A tenant in the property who sublets without permission. A family member who rents without authority. In some cases, outright fraud — where someone poses as the owner of a property they have no rights over.

A tenant who has paid three months’ advance and a security deposit to such a person has very limited recourse.

What to verify before signing:

• Title document or ownership proof — Ask to see the original sale deed, allotment letter, or property tax receipt in the owner’s name. The name must match the person you are dealing with.
• Identity proof — Aadhaar card of the owner. The name must match the ownership document exactly.
• If someone other than the owner is signing — Ask for a registered Power of Attorney specifically authorising this person to rent the property on the owner’s behalf.
• For newly built properties — Ask whether the building has an Occupancy Certificate. A flat in a building without an OC cannot legally have utility connections in the tenant’s name, which creates practical problems immediately.
• For society flats — Ask whether the owner has informed the society about the tenancy and whether the society has any specific documentation requirements for tenant registration.

A legitimate owner will have no problem producing these documents. Reluctance or evasion at this stage is a serious warning sign.

3. Read the Rent and Escalation Clause Carefully

The monthly rent is the number every tenant focuses on. The escalation clause is the number many tenants miss — and the one that can significantly increase the cost of the tenancy over time.

What to check about rent:

• What is the exact monthly rent — confirmed in numbers and words?
• When is rent due each month — the 1st, the 5th, or another date?
• What is the grace period if rent is delayed — and what is the penalty for late payment?
• How should rent be paid — bank transfer, cheque, or UPI? The agreement should specify this.

What to check about escalation:

Most leave and licence agreements in India include a rent escalation clause — a provision that allows the owner to increase the rent after a defined period.

• What is the escalation percentage — typically 5–10% per year or 10–15% at renewal?
• When does it apply — annually, or only at the time of renewal?
• Is it automatic, or does the owner need to give notice before applying it?
• Is there any cap on escalation — or can the owner increase by any amount at renewal?

A tenant who expects to stay in a property for two or three years should calculate the rent in year two and year three based on the escalation clause — not just the rent in year one. This significantly changes the affordability picture.

4. Understand the Security Deposit — Amount, Conditions, and Return

The security deposit is one of the most frequently disputed aspects of Indian rental transactions. Getting this right in the agreement prevents the most common post-tenancy conflicts.

What to check about the security deposit:

How much is it — and is it reasonable? Security deposits in India vary widely by city and property type:

Under what conditions can the owner deduct from the deposit? This must be clearly defined in the agreement — not left to interpretation at the end of the tenancy. Standard deductions typically include unpaid rent, unpaid utility bills, and damage beyond normal wear and tear.

The phrase “normal wear and tear” is important. A scuff on a wall, a minor scratch on a floor, or faded paint after two years of tenancy is normal wear and tear — not damage. The agreement should distinguish between these clearly.

What is the process and timeline for returning the deposit? In most residential tenancies, the deposit is returned after the tenant vacates and the owner inspects the property. The agreement should specify:

• How many days after vacating must the deposit be returned?
• Is interest payable on the deposit if it is held for more than one year? In some states, particularly Maharashtra, the tenant is entitled to interest on a long-held deposit.
• What is the dispute resolution process if the tenant disagrees with the deductions?

A vague security deposit clause — one that simply says “refundable” without specifying conditions and timelines — almost always leads to disputes. Ask for these specifics before signing.

5. Check the Lock-In Period and Notice Period

These two clauses determine how freely the tenant can exit the tenancy — and they are among the most frequently misunderstood parts of any lease agreement.

Lock-in period:

A lock-in period is a fixed duration at the start of the tenancy during which neither party can terminate the agreement.

• How long is the lock-in period — typically 6 to 12 months for residential tenancies?
• What happens if the tenant needs to vacate before the lock-in ends? In most agreements, the tenant forfeits the security deposit or pays a penalty equal to the remaining lock-in rent.
• Does the lock-in also apply to the owner, or only to the tenant?

A lock-in clause that binds only the tenant while giving the owner the right to terminate is one-sided and worth negotiating. Both parties should be bound equally during the lock-in period.

Notice period:

After the lock-in period ends, either party can typically terminate the tenancy by giving notice.

• What is the required notice period — one month, two months?
• Does the same notice period apply to both the owner and the tenant — or is there an asymmetry?
• Must notice be given in writing? By what method — registered post, email, WhatsApp?
• Is there a provision for early termination by the owner, for example, for personal use or sale of the property? If so, what notice does the tenant receive, and is any compensation payable?

A tenant who assumes a one-month notice period but has a two-month clause in the agreement can find themselves paying two months’ rent for a flat they no longer live in. This must be read and confirmed before signing.

6. Clarify What Is Included — and What Is Not

This is the area where most verbal agreements and written agreements diverge — and where most day-to-day disputes in tenancies arise.

What to confirm in writing:

Utilities — who pays what?

• Electricity — is it in the tenant’s name or the owner’s? Is there a sub-meter? How is billing handled?
• Water charges — included in maintenance or billed separately?
• Gas connection — piped or cylinder? Who arranges and pays?
• Internet — whose responsibility?

Maintenance charges:

• Is the monthly society maintenance charge included in the rent, or is it paid separately by the tenant?
• If paid by the tenant, what is the current amount, and can it change during the tenancy?

Furnishing and fittings: If the property is furnished or semi-furnished, a detailed inventory must be included in the agreement — every item, its condition, and whether it is operational. This inventory, signed by both parties, becomes the reference point for the security deposit return at the end of the tenancy.

Without a signed inventory:

• The tenant can be held responsible for items they did not break
• The owner can claim that items were present that were not
• Disputes are almost impossible to resolve fairly

What the tenant is responsible for maintaining: The agreement should specify which routine maintenance is the tenant’s responsibility — replacing bulbs, maintaining the air conditioner filters, minor plumbing issues — and which is the owner’s — structural repairs, major appliance failures, waterproofing.

A clause that makes the tenant responsible for “all maintenance” is unreasonable and worth pushing back on before signing.

7. Check the Permitted Use and Restrictions

Many tenancy agreements include clauses about how the property can and cannot be used. Tenants who do not read these can find themselves in violation of the agreement without realising it.

Common restriction clauses to check:

Sub-letting: Most agreements prohibit sub-letting without the owner’s written consent. A tenant who sublets part of the property — or uses it as a paying guest accommodation — without permission can face immediate termination.

Number of occupants: Some agreements specify the maximum number of people who can reside in the property. Adding family members beyond this number may technically be a breach.

Commercial use: A residential property cannot be used for commercial purposes without the owner’s consent and, in many cases, local authority permissions. Working from home is generally permitted, but running a business from a residential address can be restricted.

Pets: Pet permission must be explicitly stated in the agreement if the tenant has or plans to have a pet. A verbal confirmation from the owner is not sufficient — it must be in writing. Owners who later claim pets are not permitted will point to the agreement.

Renovation and alterations: Even small alterations — drilling holes for shelves, painting a wall, installing a ceiling fan — may require the owner’s prior permission under a strict agreement. Confirm what the tenant is and is not permitted to do without seeking consent.

Guests and visitors: Some agreements in gated societies or buildings with strict rules include provisions about overnight guests. This is rare but worth checking.

8. Understand the Renewal Terms

Most residential leave and licence agreements in India are for 11 months, after which they can be renewed. The renewal terms are as important as the original terms — and often more loosely defined.

What to check about renewal:

• Is renewal automatic — or does a new agreement need to be signed?
• If automatic, on what terms — same rent, same conditions?
• If a new agreement is needed — who initiates it and how far in advance?
• What happens if the owner does not want to renew — what notice must they give?
• Is the security deposit carried forward on renewal — or does it need to be topped up to reflect the new rent?
• Does the stamp duty and registration cost for the renewed agreement fall on the tenant, the owner, or split?

A tenant who has been in a property for two or three years often discovers at renewal that terms they assumed were fixed — maintenance charges, escalation, deposit amount — are being renegotiated. What was agreed at the start may not automatically carry forward.

9. Check for Society Rules and Building Regulations

The lease agreement governs the relationship between the tenant and the owner. But the tenant also lives in a building or society that has its own rules — and these rules apply regardless of what the lease agreement says.

What to check about society rules before moving in:

• Tenant registration — Most societies require tenants to register with the RWA or security office within a fixed period of moving in. Failure to do so can result in denial of services.
• Visitor policy — Some societies have strict rules about visitor entry, visitor parking, and overnight guests.
• Move-in and move-out timings — Many gated societies restrict large furniture movements to specific hours and days.
• Parking — Is the parking spot being rented clearly the owner’s to give? Is it a designated spot or an open area? Is parking for two-wheelers and four-wheelers handled separately?
• Pet policy — Even if the owner permits pets, the society may not. Check the society’s pet rules independently.
• Renovation and noise rules — Societies typically have rules about drilling, construction work, and noise levels — including permitted hours.
• Use of common areas — Club, swimming pool, gym — are these included in the maintenance? Is there a separate charge for the tenant?

Ask for the society’s rulebook or a summary of key rules before signing the lease. A tenant who discovers after moving in that the society has restrictions they were not told about has a much harder time negotiating with the owner.

10. Verify the Condition of the Property — Before and After

One of the most practical protections a tenant has against an unfair security deposit deduction is a clear, documented record of the property’s condition at the time of moving in.

Most tenants skip this step. They regret it when they try to get their deposit back.

What to do before moving in:

• Walk through every room with the owner or their representative
• Note every existing damage — scratches, cracks, stains, broken fittings, non-functional appliances — in writing
• Photograph everything — walls, floors, fittings, furniture, appliances — with timestamps on the photos
• Create a joint inventory document — signed by both the tenant and the owner — listing every item of furniture and its condition.
• Check every electrical fitting, every tap, every appliance — note what is working and what is not.
• Test the water pressure, the geyser, the air conditioners, and the geysers before signing.

This documentation should be attached to the agreement — or at minimum exchanged on WhatsApp in a way that creates a timestamped record.

When the tenancy ends, this record is the only protection the tenant has against claims for damage that pre-existed their occupancy. Without it, the owner’s word and the tenant’s word carry equal — which is to say, uncertain — weight.

11. The Broker’s Role at the Agreement Stage

For brokers, the lease agreement stage is not the end of the job. It is one of the most important moments in the entire rental transaction — and one where a broker who is genuinely present adds real value.

What a broker should do at the agreement stage:

• Explain the type of agreement being signed — leave and licence versus lease deed
• Flag the lock-in period and notice period before the tenant signs
• Ensure the security deposit amount and return conditions are clearly stated
• Raise the escalation clause — and make sure the tenant understands the rent in years two and three
• Confirm that the utility and maintenance responsibilities are clearly divided
• Recommend registration — and explain what it costs and why it matters
• Walk through the inventory with the tenant and owner together if possible
• Flag any clause that seems one-sided or unreasonable — even if the tenant does not ask

A broker who does this is not just closing a rental deal. They are building a relationship — with a tenant who may buy a property in three years, with an owner who has three more properties to rent, and with a reputation that grows every time someone says: “My broker actually read the agreement with me before I signed.”

A Quick Pre-Signing Checklist for Tenants

Share this with every rental client before the agreement is signed:

Owner and property:

• Owner’s identity verified — Aadhaar matches title document
• Owner’s right to rent confirmed — title document seen
• Occupancy certificate confirmed for the building
• Society is informed, and the tenant registration process is understood

Agreement basics:

• Agreement type confirmed — leave and licence or lease deed
• Registration requirement understood — and who pays
• Agreement period and commencement date confirmed

Financial terms:

• Exact rent amount — in numbers and words
• Due date and payment method specified
• Late payment penalty clause read
• Escalation clause understood — rent calculated for full tenure
• Security deposit amount confirmed
• Security deposit return conditions — timeline and deduction criteria specified

Exit terms:

• Lock-in period duration confirmed
• Lock-in applies equally to both parties — confirmed
• Notice period confirmed — one month or two
• Early termination clause read — penalties known

Inclusions and responsibilities:

• Utility responsibilities specified — electricity, water, gas, internet
• Maintenance charges — included in rent or separate
• Furnishing inventory signed — every item listed with condition
• Maintenance responsibility — tenant versus owner — specified

Society and restrictions:

• Society rules obtained and read
• Pet permission — in writing if applicable
• Sub-letting restriction confirmed
• Parking spot specified — which one, and for what vehicle

Physical condition:

• Move-in inspection done — damage noted in writing
• Photographs taken with timestamps
• Appliances tested — all working confirmed or exceptions noted
• Joint inventory signed by both parties

What Tenants Who Read Their Agreements Carefully Do Differently

They do not discover the escalation clause when the renewal notice arrives. They do not find out about the two-month notice period when they need to leave in four weeks. They do not lose their security deposit over damage they did not cause — because they have the photographs and the signed inventory to prove it.

They moved in informed. And they move out without conflict — because everything that mattered was agreed in writing before the tenancy began.

For brokers, guiding tenants through this process is not extra work. It is the work. A tenant who feels protected, informed, and guided through a rental transaction is not just a closed deal. They are a future buyer, a future referral source, and a client who will say — without hesitation — that their broker was worth every rupee of the brokerage fee.