What is the Non-Disclosure Agreement ? and why it's required?

By December 12, 2019No Comments

Renting of a property can become a real headache for the owner if he fails to manage the property as per law while giving on rent. This problem can be avoided through proper Rent/Lease Agreement which safeguards the interest of Landlord as well as the Tenant. This practice of making such Agreements is commonly practiced in most of the western countries but unfortunately in India majority of people are still ignorant about its importance.

What is a Lease agreement?

  • A Lease Agreement is considered to be a contract formed between Landlord and Tenant which contains the provisions of renting the property. And it also contains such set of conditions mutually agreed upon by the parties at the time of entering into it.
  •  A Rent Agreement usually occurs on a month-to-month basis whereas a Lease Agreement is created for long periods of time i.e., for a year or more.
  •  In a Lease Agreement the Owner of property is known as a “Lessor” and the Tenant is known as “Lessee”.
  • This agreement protects the Lessor in case of default by lessee as the Ownership lies with him and also leasing of property helps him in minimizing his tax liabilities simultaneously it saves Lessee’s time and efforts as Leasing is relatively simpler than hefty legal procedures.
  • A Rent Agreement can only be between private parties whereas a Lease Agreement can be formed between Government Bodies and others.
  • Section-17(d) of the Registration Act, 1908 makes registration of Lease Agreement compulsory for property leased for a period exceeding one year.

The Essential Requirements of a Lease Agreement are:

  1. Name of the Parties: There shall be no ambiguity as to the name of “Lessor” and “Lessee” and their respective competency to contract. Like all contracts, legal requirements must be met for a contract to enforceable in the eyes of law.
  2. Duration of Occupancy: Lease Agreement shall have a statement enumerating the duration for which the property is to be leased. The duration can vary from a year to a longer period of time.
  3. Consideration: Consideration is an essential element for a valid Lease Agreement. Consideration depends upon the type of lease entered into for e.g., Agricultural Lease in such type of lease the consideration maybe provided in the form of goods or other services. Rent payment are the usual form of consideration in Lease Agreements.
  4. Sub-lease: Unless there’s a contract to the contrary the Lessee can sub-let the whole or any part of his interest in the property to another subject to Terms & Conditions mentioned in the Agreement.
  5. Security Deposit: A pre-agreed sum of amount between the parties for a specified period of time is to be given by the Lessee and the same shall be held by the Lessor as a security deposit. Usually security deposits are refundable at the end of the term of the lease.
  6. Notice Period & Terms of Renewal: The said clause contains the period before which Landlord has to give a reasonable notice to Tenant to vacate the property. Moreover, some Lease Agreements also contains provision of auto renewal or no renewal whatsoever. These terms of renewal should be clearly mentioned. And at the end of the Lease period it’s at Lessee’s discretion whether he wants to renew/terminate the Lease or buy the asset.
  7. Exit clause: In case the Lessee terminates the lease before the prescribed period then in such case any loss suffered by the Lessor shall be borne by the Lessee. And the Lessor shall be entitled to such other compensation as may be required.
  8. Signature and Date: The Agreement must be read over and understood by both the parties then signed and dated under their hand to make the Agreement valid and enforceable.


For security reasons law has made police verification of Tenant before renting a compulsory procedure. The Landlord has the right to inspect the property after giving due notice to the Lessee to ensure that the Lessee is complying with the Terms & Conditions of the Agreement. This legal document safeguards both Landlord and Tenant’s interest against any unlawful practices. 

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