Oct Sun 2018

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Renting property? safeguard your rights with A lease agreement – Lease agreement

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There are two different ways to rent a property in Sri Lanka. This is by way of “Tenancy” agreement, or a “Lease” contract. If the property is also governed by the Rent Act, the rules, terms, and power of the landlord or tenant will differ. The properties covered by the Rent Act, the law tends to be in favor of the tenant in Sri Lanka.  And properties that are not covered by the Rent Act, the law to favors the landlord.

Tenancy agreement – without the Rent Act.

A tenancy is a rental with a non-fixed term, and so is an agreement. This shouldn’t always be a written agreement. The tenancy agreement is defined as the authorization of use of his property to the tenant. And the authorization is by the landlord. Both parties can break the contract if it announced with at least one month’s notice. If there is a dispute, this may include legal intervention to evict the tenant.

Tenancy agreements are not subjected to any fine or tax, unlike Lease contracts. With this kind of contract, it is advisable to write an official copy of the agreements. This should include the signatures of both parties. Notary services should use to ensure greater security in the renting process.

Tenancy agreement – with the Rent Act.

The renting price of the property governed by Rent act is set against the value which given to the property by the state.
Tenancies under the Rent Act, give more power to the tenants. The landlord cannot end the contract unless he has one of the following legal reasons.

  • Late rent payment of over one month
  • Use of the premises for illegal/immoral activities
  • Large deterioration of the premises due to misuse of the property

The landlord is not allowed to stop the Tenancy contract under rent act despite the above situations.

Lease contracts

A lease contract is a legal contract recognized by Roman-Dutch law. It is the most secure way to own (for a limited time) and use a property owned by another entity. The lease contract is a fixed time agreement. And the lease period should include in the written contract. If property not governed by the Rent Act, the landlord and tenant can agree on all points of the lease contract. This still gives a lot of ways to negotiate prices and conditions.
If this is not the case, and the property is under the Rent Act. It’s forbidden to pay a deposit greater than the value of 3 month’s rent, any gratuity or commission.

The lease contract needs both parties’ signatures in front of two witnesses. To protect the tenant, the lease has to be registered at the land registry. When leasing a property, you have to ask the Landlord to provide a Certificate of Conformity.

To avoid any scam as an expat, it is best to hire a lawyer. A lawyer checks the reliability of the offer. Also checks legal documents as the Property’s Certificate of Conformity. This will include checking whether the property is encumbered or registered. And if the property belongs to the Landlord.

Rental and security deposits

With regards to the legal situation of the property, the deposit and agreements of the rental contract are more or less freely chosen and agreed. In any renting contract, it is important to cover the following points.

  • Security Deposit
  • Terms of Payment
  • Responsibility for repairs
  • Responsibility for payment of rates
  • Mutual covenants (Landlord/Tenant obligations on the situation)
  • Personal covenants
  • Inventory of the goods
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Even under the Rent Act, the rent is monthly paid, and there is a deposit given to the Landlord. The usual termination notice of the contract is one month. As explained earlier, all general terms of the contract can be discussed and agreed.

When renting a property not governed by the Rent Act, you should also be able to negotiate the price. The landlord is free to rent his accommodation to who he wants, at the price he wants.
Some new rules entered the Rent Act in 2002. Though in Sri Lanka, the landlord’s control of his property is quite limited as the tenant is favored.

Finding it hard to draft these agreements on your own? Please feel free to contact us.

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