• Rented flat for commercial purpose

Hi , we have given our flat for commercial purpose to Real estate firm. We have made registered agreement of 2 Years .Agreement has made between firm's 2 partner's name and my father.

My concern is that we have given flat to real estate firm. Queries as below :
1.We take 16 k rent and 50k deposit . out of which,Every month ,they give 15 k using online transfer and remaining 1k with cash mode as they said they face some tds related issues. Is it okay ?

1.What precautions should i take in the present and in the future while renewing the registered agreement (as they are into real estate sector,they knows all minor things )?

3. Their demand is to make new agreement between firm's name and my father. But as property is residential and given for commercial purpose , is there any risk behind making new agreement between their firm and my father ? or shall i continue as with their partner's name and my father as it is in the future while renewing agreement ?

Thanks and Regards
Sachin K
Asked 4 years ago in Property Law
Religion: Hindu

2 answers received in 10 minutes.

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12 Answers

agreement should be made between firm and your father

2) not necessary to execute agreement between partners and your father

3) as long as you enter into registered leave and licence agreement your interests are protected

4) you must get agreement vetted by local lawyer

5) as far as TDS issues are concerned consult your local CA

Ajay Sethi
Advocate, Mumbai
87894 Answers
6207 Consultations

5.0 on 5.0

for 10 years it would be a lease deed

2) enter into leave and licence agreement for 33 months with renewal clause

Ajay Sethi
Advocate, Mumbai
87894 Answers
6207 Consultations

5.0 on 5.0

1) If you're society is registered under Maharashtra Cooperative Society Act, than society can to objection against owner and tenant if they are engaged in any commercial business.

2) Before making new agreement first check whether you're flats comes under commercial buildings or ownership apartment or co-op society. than further questions will be answered.

Ganesh Kadam
Advocate, Pune
12335 Answers
191 Consultations

4.9 on 5.0

Dear Client,

Receiving rest one thousand in cash has no c complications.

While renewing agreement, keep this clause -- The lease of the Premises may be renewed at the lessor sole option.

Even if, agreement executed with firm`s name, partner`s do not exonerate from their liability.

Under which act firm is registered,

Partnership Act - No issues or Limited Liability Partnership Act - than little complication.

Also, include this clause, any renovation/improvement/ made by the lessee for the purpose of their business, lessor will not be accountable for recovery of payment on it on the expiry and subsistence of lease.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

1. Show the full Rent amount in your Tax returns, to avoid any illegalities.

2. Rent /Lease Agreement for any number of years is permissible, BUT IF the Flat is used as a Office /Commercial reasons, THEN it is best to get the agreement registered between Father and the Firms name, to avoid future illegalities.

Keep Smiling .... Hemant Agarwal

Hemant Agarwal
Advocate, Mumbai
5612 Answers
25 Consultations

5.0 on 5.0

As per S.24(3)(b) of the rent act an agreement of licence in writing shall be conclusive evidence of the fact stated therein.

As per S.55 of the act, Tenancy agreement to be compulsorily registered.

As per S.55(1), (1) Notwithstanding anything contained in this Act or any other law for the time being in force, any agreement for leave and licence or letting of any premises, entered into between the landlord and the tenant or the licensee, as the case may be, after the commencement of this Act, shall be in writing and shall be registered under the

Registration Act, 1908.

(2) The responsibility of getting such agreement registered shall be on the landlord and in

the absence of the written registered agreement, the contention of the tenant about the

terms and conditions subject to which a premises have been given to him by the landlord

on leave and licence or have been let to him, shall prevail, unless proved otherwise

(3) Any landlord who contravenes the provisions of this section shall, on conviction, be

punished with imprisonment which may extend to three months or with fine not

exceeding rupees five thousand or with both.

Important provision:-

As per S.30, Conversion of residential into commercial premises prohibited.

(1) A landlord shall not use or permit, to be used for a commercial purpose any premises

which, on the date of the commencement of this Act, were used for a residential purpose.

(2) Any landlord who contravenes the provisions of sub-section (1) shall, on conviction,

be punishable with imprisonment for a term which may extend to six months or with fine

which may extend to ten thousand rupees or with both.

As per 31. Giving receipt for any amount received compulsory.

(1) Every landlord shall give a written receipt for any amount at the time when such

amount is received by him in respect of any premises in such form and in such manner as

may be prescribed.

(2) Every landlord shall, without charging any consideration, issue the rent receipt in

respect of the premises let out to the deceased tenant in the name of the family member

referred to in sub-clause (d) of clause (15) of section 7.

(3) Any landlord or person who fails to give a written receipt for any amount received by

him in respect of any premises shall, on conviction, be punishable with fine which may

extend to one hundred rupees for each day of default.

Thus, the tenancy between you and the tenant is unlawful and they may take undue advantage of this if consulted through some other lawyer or they may be aware. Be cautious in all aspects henceforth and do not allow them to encroach upon your premises which shall be difficult in future to get them evicted.

Rajaganapathy Ganesan
Advocate, Chennai
2085 Answers
8 Consultations

4.9 on 5.0

Please note any agreement you make above 11 months better get it registered .... Secondly agreement with firm should be compulsory made in name of firm represented by it's directors .....there's no problem of receiving payment in such manner till you file returns.....regarding renting out residential property for commercial if they have got licence till then there's no problem...

Swarnarka Chowdhury
Advocate, Mysore
1878 Answers
5 Consultations

5.0 on 5.0


Rs 1.80 is the limit for payment towords the rent for non TDs payment.

You may show in your income from. House property the actual amount.

In case the agreement is made in the name of firm and as the premise is being used commercially and society have no issue then you may go ahead and the municipal taxes will go as rented property.

You need to get the lease agreement registered to be safe for the lease period on payment of required stamp duty.

Vimlesh Prasad Mishra
Advocate, Lucknow
6848 Answers
23 Consultations

4.9 on 5.0

No, if the agreement is for 2 years then there must be a condition that whatever expenses from their side will extend the agreement for 10 years only then they can say this otherwise you have all right to vacate the same.

And no issue in transfer of 1K.

But, you need to take care as it is for commercial purpose.

Sanjay Baniwal
Advocate, South Delhi
5464 Answers
13 Consultations

5.0 on 5.0

1. You have to keep an account of the agreed amount of monthly rental payment, so if this 1k is not brought into account, then you may enter the monthly rental amount as 15 k alone.

2. Whether they are into the real estate or anything, your rental agreement should contain the conditions in general that are mutually agreed between both and is binding on both the parties.

3. Since this is a residential property, you cannot rent it out to a commercial firm for commercial activities.

Hence it would be better that the firm name be avoided in the rental agreement.

T Kalaiselvan
Advocate, Vellore
78048 Answers
1543 Consultations

5.0 on 5.0

1 small update: They have invested around 10 lacs of rupee for making interior design and furniture in the flat.so considering business ethics , we should allow them for 10 years for rental purpose.

It is not mandatory that you have to allow them to be there for another 10 years and also you make a lease agreement for three years with lock in period for 3 to 6 years and the lease agreement to be renewed once in three years.

This will be more safe for your situation.

T Kalaiselvan
Advocate, Vellore
78048 Answers
1543 Consultations

5.0 on 5.0

As far as possible take all monies vide account payee cheque. Don't evade any tax. If you are making agreement brake services of a good lawyer and register it compulsorily. There is no harm making agreement in that way. Buy as per law residence Property cant be used for commercial purposes as commercial taxes and everything varies from residence premises. Both company and partner name can also be inserted in agreement.

Prashant Nayak
Advocate, Mumbai
27224 Answers
88 Consultations

4.4 on 5.0

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