Government to make lease document registration a must

In order to make a stable legal footing in cases of disputes between property owners and tenants, the government has declared that the lease document should be registered for a period of even less than one year.

An amendment proposed to the Registration Act in 1908 seeks to redefine ‘lease’ to remove the provision stating that those for a period under one year need not be registered. However, this amendment would release the lease agreements related to an amount which is below the floor price. This amendment was made in order to give a sturdier legal standing to property owners and buyers/tenants with unregistered lease documents. This is because the period they deal with is under one year.

Apart from just creating a strong legal standing between the landlord and the tenant, this amendment was made in order to curb the exploitation by the landlords who alter the lease in a way (like 11 months) to keep them from registration. There is also land grabbing cases which eventually puts a non-registered lease owner at risk.

Impact of registration of the lease agreement:

Studies have shown that making registration compulsory for every lease could deter business as it will cause sheer volume and floor price was taken into consideration by the government to make it binding. However, various states will give the freedom to decide the floor price to be fixed based on the larger public interest.

It is also known that the government will make it mandatory to register powers of attorney. The power of attorney will be put under the Section 17 which deals with compulsory registration. In case a property is transferred without a registration, it will cause a loss to exchequer and a cause for disputes.