Land Renting Contract

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Land Renting Contract

A Brief Introduction About the Land Renting Contract

This contract is entered between two parties, the landlord and the tenant. The landlord is the owner of the land, and the tenant is the party who wants to take the land on lease.

The land rental agreement form can be used to understand the basics of such contracts. The description of the land being rented, including any improvements, should be mentioned in detail. The purpose for which the land is being leased must be incorporated in the contract. The responsibility of maintaining the land lies with the tenant, and the tenant has the sole right to use the land.

The tenure of the agreement, including the starting and ending date, is mentioned in the contract. Unless there is a provision for extension of the lease, the tenant has to vacate the land on the expiry of the contract. The rent which would be payable to the landlord would not include the security deposit.

The due date for the rental needs to be clearly mentioned in the contract. There are certain conditions need to be fulfilled, such as approvals from certain statutory bodies, and the lessor has to declare that the site is free of occupants. The lessor needs to authorize the lessee for building any structures on the land.

Who Takes the Land Renting Contract? – People Involved

When an individual or an entity owns a piece of land that they would like to contract, and another entity would like to take that land on rent, they enter into a land renting contract.

Purpose of the Land Renting Contract – Why Do You Need It?

The individual or entity leasing out the land would like to ensure a steady flow of income as lease rental over the contract period. The tenant wants to ensure that the land can be used according to the purpose mentioned in the agreement. The tenant would also take the land with a clear title.

All the required approvals from the concerned statutory authorities should be taken by the lessor before leasing the land to the lessee. The lessor should have obtained environment clearance as well. If there is a breach of any clause by either lessor or lessee, the lease can be terminated. Any prepaid rental paid by the lessee to the lessor will be returned by the lessor.

Contents of the Land Renting Contract – Inclusions

The following information should be included in the contract:

  • The names of the parties to the contract, the lessor, and the lessee. The legal status should also be stated
  • The site details for which this contract is being drafted
  • The purpose for which the land is being leased
  • The consideration for the contract and the frequency of payment of rental
  • Warranties and representation of the lessor: The lessee is granted exclusive permission for the use of land
  • Authorization to build: The leased structure may be demolished or renovated
  • Lessee compliance: The lessee should comply with the laws of the state

How to Draft the Land Renting Contract?

You can refer to a rental contract template for drafting an agreement and make any modifications required.

The following points need to be kept mind while drafting:

  • Both the lessor and the lessee should be competent to contract and over the age of 18
  • The lease rental is paid by the lessee and the lease repayment schedule
  • The contract terms should be fair to both the lessor and the lessee
  • A confidentiality clause should be incorporated, and neither party should disclose any proprietary information to a third party
  • Dispute resolution clause should be included so that both parties know that disputes would be resolved by litigation or arbitration, payment of attorney fees and the jurisdiction where the dispute is being resolved
  • Termination of contract clause if the parties want to terminate the contract and the notice period prematurely

Negotiation Strategy

If the lessor makes an offer to lessee, it is up to the lessee to either accept the offer or to make counteroffer. The parties to the contract can negotiate each clause in the contract to come to a mutual agreement before signing.

Benefits & Drawbacks of the Land Renting Contract

The benefits of land renting contract are as under:

  • Protection of interest: The interest of both parties is protected. The lessor is assured a steady flow of income and the lessee has the authority to use the land as stated in the agreement
  • Termination of contract: Either party can terminate the contract by serving notice to the other party
  • Take legal action: If one party violates the contract, then the injured party can take legal action

These are the drawbacks of land renting contract:

  • Loss of income: The lessee may default in payment of rental
  • Defective title: The title to the property may not be clear
  • No legal remedy: If either party violates the contract, no legal action can be taken

What Happens In Case of Violation?

In case of violation of the land renting contract, both the parties have the following remedies:

  • Money Damages: The injured party is compensated according to what they would have received had the contract been implemented and lost profits for a total breach. For a partial breach, the cost of getting another lessee is charged
  • Restitution: The injured party is restored to the position occupied before the contract(1)
  • Rescission: The agreement is canceled as fraud was involved
  • Reformation: The court drafts a new contract to eliminate inequities
  • Specific performance: Monetary compensation is not accepted; the contractual obligation has to be fulfilled

Both parties to contract should refer to the rental agreement form. There should be a dispute resolution clause, a termination clause, and a confidentiality clause. This will ensure that disputes are minimized, and the contract is performed properly by both parties.