Perils of renting out a house

POSTED BY Ram ON April 15, 2012 7:52 pm COMMENTS (4)

This question is actually inspired by a post by Bhavin Nagda on this forum that was also answered by justgrowmymoney. Link: http://localhost/jagoforum2/need-information-on-property-rules-and-regulations/3280/.

Is it true that if I was to rent out my house to the same tenant for 14 years or more, then that tenant gains the legal ownership of the house? Maybe I misunderstood justgrowmymoney, but what I understood is that a landlord will lose his/her house in that case. Is that so?

What are the ways to ensure such a thing does not happen to a landlord? If someone has given a house on rent with a proper contract agreement in place and that contract is automatically renewed each year, then does this sort of situation arise even in that case?

Thanks,
Ram.

4 replies on this article “Perils of renting out a house”

  1. Ram says:

    Justgrowmymoney, Ashal, and BanyanFA…thank you for your inputs. This is new information for me.

    Manish…maybe this could be one of your future articles. Nowadays so many people “invest” in apartments/houses and rent it out.

    Thanks,
    Ram.

  2. BanyanFA says:

    Hi Ram,
    What ever you have mentioned is true. I have several such examples in mind where several years of court battle were involved to evict the tenant and that too involved paying several lakhs to the tenant for eviction.

    I completely agree with JustGrowMyMoney’s suggestion. You should make sure that no tenant tends to be very comfortable beyond 5 years.

    Regards
    BFA

  3. Private property protection laws are weak in India in general.

    One simple way is this:

    First sign an agreement with the tenant for say 11 months (12 months and more leases MUST BE REGISTERED at THE LOCAL REGISTRAR’S OFFICE ACROSS ALL OF INDIA].

    Start date: 16 Apr 2012
    End date: 15 Mar 2013

    Start the next lease agreement some 2-3 days after the previous lease closure:

    Start Date: 18 Mar 2013
    End date: 17 Feb 2014

    Then again do the next lease 2-3 days away, say 19 Feb 2014!

    Thus you can prove in a court of law that the property was NEVER ENJOYED by some one else for 14 years at a ‘single stretch’. In general it is good to ask tenants to vacate after 5-7 years however well they have maintained the house so you dont get into a tussle.

    In any case if the tenant refuses to vacate be ready for a long tussle.

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