• How to cancel registered lease deed?

I am planning to purchase a property in Gurugram, Haryana. This is a built up residential property. The premises are vacant- I have checked it physically myself.
During title search we have learnt of a registered lease deed executed in 2021 by the seller with another party - the tenant. This lease deed, though registered, is for ‘more than 30 years’ ( compared to the usual 2-3 years residential lease period ) and at a rent one-sixth of market rent. Perusal of the clauses and language of the lease deed makes it apparent that it is not a real lease deed but rather for some other purpose.
The seller now says that the tenant in the above lease deed is the real brother in law of the seller’s son and the only purpose of the lease deed was for income tax purposes. The premises are vacant and the tenant shall give whatever is required in writing and otherwise to satisfy us.
Since it is a registered lease deed what should we do, as a buyer, to ensure complete documentation? Will a registered cancellation deed be required to cancel the registered lease ? Will a tripartite unregistered agreement between buyer, seller and tenant confirming that the lease has been terminated, possession given back to landlord- seller and that tenant has no tenancy or other right in the premises be sufficient?
Please advise…
Thank you
Asked 9 months ago in Property Law
Religion: Sikh

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11 Answers

As such there is no restriction on period of lease. Lease can be for 99 years also. As per law lease above the period of 30 or above would be counted equivalent to sale so stamp duty payable on sale deed shall be payable for registration of lease. So lease for 30 years is valid if it comply with other legal requirements. Lease can be terminated in terms of lease, by efflux of time etc. Details required. 

Siddharth Srivastava
Advocate, Delhi
1252 Answers

5.0 on 5.0

Lessor should terminate lease deed 

 

2) registered cancellation deed can be executed wherein both the lessor and lessee sign the deed of cancellation in presence of 2witnesses before the sub registrar 

Ajay Sethi
Advocate, Mumbai
94933 Answers
7575 Consultations

5.0 on 5.0

Yes registered cancellation deed required for cancellation of registered deed

Prashant Nayak
Advocate, Mumbai
32077 Answers
183 Consultations

4.1 on 5.0

It is essential that the registered sale deed be cancelled by registered cancellation deed executed jointly by both the lessor and lessee before the sale deed is registered in favor of the buyer. 

Even though the lease deed appear to be sham or nominal,  it will be a permanent problem if it is not cancelled by a registered deed. 

 

T Kalaiselvan
Advocate, Vellore
85133 Answers
2218 Consultations

5.0 on 5.0

A registered lease deed is a legal document that creates a contractual relationship between the landlord and the tenant for the use and occupation of a property for a specified period and rent. A registered lease deed can be cancelled by mutual consent of both parties or by operation of law. A registered lease deed can also be challenged in court on various grounds, such as fraud, coercion, undue influence, misrepresentation, mistake, lack of free consent, lack of mental capacity, etc.

Some of the steps that you can take to cancel a registered lease deed are as follows:

  • Obtain a no-objection certificate (NOC) from the tenant stating that he/she has no objection to the cancellation of the lease deed and that he/she has vacated the premises and surrendered the possession to the landlord. The NOC should also state that the tenant has no claim or right over the property and that he/she releases the landlord from all liabilities and obligations under the lease deed.
  • Execute a cancellation deed with the tenant in the presence of two witnesses. The cancellation deed should mention the details of the lease deed, such as date, parties, property, rent, term, etc. The cancellation deed should also mention the reason and mode of cancellation, such as mutual consent, expiry of term, breach of conditions, etc. The cancellation deed should also mention that both parties have settled all their dues and disputes and that they have no further claims or complaints against each other.
  • Register the cancellation deed with the sub-registrar office where the lease deed was registered. You should pay the applicable stamp duty and registration charges for the cancellation deed. You should also submit copies of the lease deed, NOC, identity proof, address proof, and photographs of both parties along with the cancellation deed.
  • Update your records with the revenue department and other concerned authorities regarding the cancellation of the lease deed. You should also obtain a fresh encumbrance certificate from the sub-registrar office showing that there is no encumbrance on your property due to the lease deed.

Now, coming to your questions:

  • Since it is a registered lease deed what should we do, as a buyer, to ensure complete documentation?

As a buyer, you should ensure that you have all the necessary documents and approvals for purchasing the property from the seller. You should also verify that the seller has clear title and possession over the property and that there is no dispute or litigation pending over it. You should also check that there is no encumbrance or lien on the property due to any loan, mortgage, tax, etc. You should also inspect the physical condition and location of the property and ensure that it matches with the description and specifications given by the seller.

  • Will a registered cancellation deed be required to cancel the registered lease ?

Yes, a registered cancellation deed will be required to cancel the registered lease. A registered cancellation deed will ensure that there is no legal validity or enforceability of the lease deed and that there is no scope for any future claim or dispute by either party.

  • Will a tripartite unregistered agreement between buyer, seller and tenant confirming that the lease has been terminated, possession given back to landlord- seller and that tenant has no tenancy or other right in the premises be sufficient?

No, a tripartite unregistered agreement between buyer, seller and tenant will not be sufficient to cancel the registered lease. An unregistered agreement will not have any legal value or effect as compared to a registered document. An unregistered agreement will also not reflect in the official records and may not be accepted by the authorities or courts as evidence. An unregistered agreement may also be challenged or disputed by any party on various grounds.

 

Muraleedharan R
Advocate, Trivandrum
373 Answers
2 Consultations

5.0 on 5.0

Tripartite separate agreement that the lease is canceled and further the tenant will sigh the sale deed as one witness. 

Yogendra Singh Rajawat
Advocate, Jaipur
22671 Answers
31 Consultations

4.4 on 5.0

A registered Cancellation Deed is the correct solution for you in the instant case.

Shashidhar S. Sastry
Advocate, Bangalore
5151 Answers
314 Consultations

5.0 on 5.0

Hello, 

premises is vacant physically but in reality its in possession of the person in whose name lease deed is registered, it would be better to get the lease deed cancelled first and then you buy property otherwise you may end up facing unwanted litigations.

 

Thanks  

Jagvir Singh Sorout
Advocate, Hodal, Haryana
11 Answers

Not rated

A registered lease agreement can only be cancelled by another agreement to be signed by the same parties and registered. In the circumstances of your case, better insist on cancellation of the extant lease agreement before you venture to buy the property.

Swaminathan Neelakantan
Advocate, Coimbatore
2821 Answers
20 Consultations

4.9 on 5.0

Dear Client
Here are some steps you may consider taking to ensure complete documentation and address the registered lease deed issue:

Consult a Property Lawyer: Engage a qualified property lawyer in Gurugram who specializes in real estate transactions. They can review all the documents and advise you on the best course of action.

Obtain Tenant's Written Consent: As the seller claims that the lease was for income tax purposes and the property is vacant, it's important to obtain written consent from the tenant stating that they have no tenancy or other rights in the premises, and that possession has been returned to the seller. This can help establish that the lease is no longer in effect.

Tripartite Agreement: You may consider drafting a tripartite agreement among the buyer, seller, and tenant. This agreement should confirm the termination of the lease, the return of possession to the seller, and the tenant's acknowledgment that they have no ongoing rights in the property. While this agreement can be used for clarity, it may not override the registered lease deed in case of a dispute, so it's important to get the tenant's cooperation.

Registered Cancellation Deed: To provide greater legal certainty, you might want to explore the possibility of executing a registered cancellation deed for the earlier registered lease deed. This would effectively cancel the earlier lease and remove any legal encumbrances on the property. Consult with your lawyer on the specific requirements and process for registering such a deed in Haryana.

Title Insurance: Consider obtaining title insurance to protect yourself against any unforeseen title defects or disputes related to the property. Title insurance policies can provide coverage for legal costs and financial losses in case of title-related issues.

Due Diligence: Ensure that all other due diligence aspects of the property purchase are completed, such as verifying the seller's title, checking for any other encumbrances or liabilities on the property, and confirming that all necessary approvals and clearances are in place.

Anik Miu
Advocate, Bangalore
9020 Answers
110 Consultations

4.7 on 5.0

- Yes, you can enter into a tripartite agreement for the same , however as the said lease deed was registered then it is advised to registered this agreement as well.  

- Further, you can take an Indemnity bound from the said seller 

Mohammed Shahzad
Advocate, Delhi
13363 Answers
199 Consultations

5.0 on 5.0

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