In India, it is popular for many people to sell or buy a property on lease. According to their lease agreement, the buyer has the right to use the property for a specific period of time.
But what if you want to cancel the lease before the end of the lease agreement? What are the procedures you need to follow? We’ll look at all these topics in detail in this article.
Understanding Termination Vs. Cancellation
The terms “termination” and “cancellation” are often used interchangeably. However, there are certain subtle points that differentiate the two.
Lease Termination
A lease termination is a more general term used to refer to a lease ending, which can be due to both planned (mutual agreement) or unplanned (breach of contract) circumstances, often necessitating considerations.
Lease Cancellation
A lease cancellation refers to a more specific situation where the lease is ending prematurely due to a breach of contract or other causes.
How To Cancel Registered Lease Deed
A lease deed involves both parties (lessor and lessee), so it can’t be done by one party alone. To cancel a registered lease deed, both the parties should follow the below procedures.
- Whether the cancellation is due to mutual agreement or breach of contract, both parties should agree to end the lease.
- The next step is to formalize a “deed of surrender.” This document is legal proof that both parties agree to the early lease cancellation.
- Both parties should visit the sub-registrar’s office where the original lease was registered and register the deed of surrender.
- You can also consult a lawyer to ensure there are no mistakes or loopholes in the deed of surrender.
Grounds For Cancellation Of A Lease Deed
There are two ways a lease deed can be cancelled.
- Mutual agreement
- Breach of contract
Mutual Agreement
As the name implies, this type of lease cancellation happens when both the parties, the lessor (landlord) and lessee (tenant), mutually decide to cancel the lease early.
This is the smoothest way to end a lease and there will be no disagreements or any other issues associated with this method. This lease can be ended by formulating a “deed of surrender” document which indicated the early cancellation of the lease.
Breach Of Contract
As the name suggests, this type of lease cancellation occurs when either the lessor or lessee fails to fulfill or violates the terms of the lease agreement.
This type of lease termination can be complex. Most of the time, the involved parties will attempt to resolve the issue without the cancellation of the lease. However, if the issue escalates, legal action might be taken to settle the dispute, consuming time and money and resulting in lease cancellation.
Unforeseen Circumstances
Sometimes, a lease can also be cancelled due to unforeseen circumstances. This can happen from both the parties’ sides. Even though the lease wasn’t drafted for unforeseen circumstances, you can discuss the issue with the other party and request an early termination.
Important Points To Consider During A Cancellation Period
A lease cancellation is a very important procedure; you must ensure you do everything correctly and without any mistakes. Below are some points you should consider during the cancellation period.
Notice Period
If you wish to end your lease agreement with the landlord, ensure you notify your landlord before the end of the notice period. This notice period will clearly be given in the lease agreement, within which time you should inform whether you wish to end the lease.
Missing this deadline can lead to serious consequences, such as penalties for early termination fees.
Documentation
Ensure you keep all the necessary documents in hand during the cancellation period. These documents are crucial for a smooth lease cancellation. The documents required are listed below.
- Lease agreement
- Written note of cancellation along with proof of delivery
- Communication records (e-mail or written communication with the landlord)
- Rent receipts
- Security deposit records
It is best to consult a professional and discuss if you need any more documents for the procedure.
Security Deposit
The terms of your security deposit should also be detailed in the lease agreement. Ensure you review it correctly.
After a lease cancellation, you are entitled to get back your security deposit within a 1 or 2-month period. The landlord is also entitled to deduct the amount from your security deposit for cleaning and repair costs.
Professional Help
Seeking professional help can make the process all the more easier. If the lease cancellation process seems complex, it is best to consult a lawyer and go through all the legal requirements.
This can help you avoid making unnecessary mistakes and ensure a smooth lease cancellation.
Conclusion
Whatever the reason for your lease cancellation, ensure you do the procedure correctly and do not allow for any mistakes. Consult a lawyer in case of any concerns.
FAQs
Yes, a lease deed can be cancelled in India. There are two ways a lease deed can be canceled: Mutual agreement and Breach of contract.
To cancel a lease agreement, both parties must formalize a deed of surrender and submit it to the sub-registrar’s office along with the necessary documents. The lease will be terminated after verification.
If you and your landlord have mutually agreed to cancel the lease, you should write a deed of surrender to the sub-registrar’s office.
Here are the points that should be mentioned in the document.
The official termination date
Repayment of security deposit (including deductions)
Outstanding rent or utility bills