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Wednesday 18 September 2013

Check while opting for co-tenancy

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Whether you are a tenant or a landlord, here's the documentation you need to have in place before you consider the benefits of a shared, rented accommodation

 


In 2007, when Mumbai-based Priya Venkatramani saw an advertisement on a social networking site, she thought it was the answer to her prayers. "I was looking to share a flat since I could not afford one in central Mumbai due to the high rentals. So the ad for a female roommate in the same area seemed like a timely break for me. All had to do was pay around 15,000 as her share of deposit money to the roommate, and 6,000 as her share of rent.


However, it took barely two days before the trouble began. The situation deteriorated to the extent that I wanted to leave the place within the first five days. However, her roommate refused to return the deposit money. The local police told me to approach the courts. Since she did not have any legal documents to back her claim, her friends advised her against taking any legal action and she complied, losing the entire amount in the bargain. What can you do to avoid being in a similar situation? We spoke to several experts to find out about the things you need to consider.

Landlord's nod

The first thing one should check while going for cotenancy in a leased property is whether the arrangement for shared accommodation has the consent of the landlord. Often, a tenant who cannot afford the entire rent keeps a co-tenant without the knowledge of the landlord and the housing society to share the cost. This, however, is completely illegal


In such a scenario, points out Hiranandani, the co-tenant will not have any legal rights if there is a dispute. However, in the case of a family that is living in the leased house, individual agreements with the landlord are not necessary. Residents and Users Welfare Association, the lease agreement should specifically mention co-tenancy. The co-tenant must submit the documents required for the necessary verification to the landlord.

NOC from the housing society

It is important to remember that the housing society in which the property is located also needs to give a separate no-objection certificate to all the co-tenants. "If there are three tenants in the house, the society will need to furnish a separate certificate to each. Moreover, distinct police verification would need to be done for each tenant as mandated by the law," says Ravi Goenka, high court advocate at Goenka Law Associates.

Registering the agreement

According to Goenka, the lease agreements should be notarised and registered at the deputy registrar's office. If the tenant is planning to stay in the property for more than a year, it is mandatory to have it registered. Doing so offers legal security to the landlord in case of any dispute, say, when the tenant refuses to vacate the property. The landlord needs to register the lease agreements of all the co-tenants concerned.

Shared liability

In the case of damage, the liability needs to be borne equally by all the co-tenants, unless specifically mentioned in the lease agreement. So, if you have a lower share of the rent for a smaller room and are eligible to a proportionate share of liability, make sure your agreement clearly states this.

Tax benefits

A co-tenant in an apartment without a valid agreement also misses out on the tax benefits, which he could have received by way of house rent allowance deduction. You will need to submit copies of the rent agreement and receipts to avail of the deduction. Also, if the rent is more than `1.8 lakh per year, the landlord's PAN card will also have to be submitted. If the rent paid is not availed of as deduction, the co-tenant also has the option to claim it while filing his tax returns.

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