MC Explains: Can landlords ask tenants to vacate in order to sell the apartment?

The manner in which real estate prices are soaring in Bengaluru calls for an intervention by local governing bodies.

Bengaluru’s soaring real estate market has put tenants in a spot, with landlords asking them to vacate the apartment in the middle of the agreement period in order to sell the property.

Local brokers say the real estate market is at its peak in Bengaluru, with prices at a five-year high. Landlords are scrambling to sell their apartments even in the middle of the rental period, hoping to clock a hefty return before things change.

However, can they ask tenants to vacate in the middle of agreement tenure in order to sell the property?

Experts are divided on the issue, and say it depends on the nature of the agreement signed.

Srinivas V, an advocate, clarified that an 11-month rental agreement does not require registration at the sub-registrar's office.

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According to the Registration Act, 1908, clause (d) of sub-section (1), registration is mandatory only for a property that is on lease for one year or more.

"Additionally, the agreements contain a clause that either party can vacate by serving a notice period, which varies from agreement to agreement. In such cases, the landlord can give the tenant due notice and ask him / her to vacate at the end of the notice period," he added.

According to advocate Vittal BR, if no such clause is there in the agreement, tenants can approach the civil court to obtain a stay on the notice to vacate, after sending a legal notice to the landlord.

But when the document is unregistered, it becomes difficult for the tenant to challenge the notice to vacate legally.

Even for agreements of a tenure longer than 11 months which need to be registered, very often the parties avoid paying the applicable stamp duty. Per section 3 of the Indian Stamp Act, 1899, stamp duty needs to be paid for every legal document, say experts.

At least 10 tenants Moneycontrol spoke to said none of them had paid the stamp duty while signing the rental agreement.

"In such cases, the courts will first impose a fine on the tenants (or on both parties, since the landlord has also signed & is responsible?) even before proceeding with the case," lawyers added.

Lack of government intervention

Vittal said the manner in which real estate prices are soaring in Bengaluru calls for an intervention by local governing bodies.

Approved by the union cabinet on June 2, 2021, the Model Tenancy Act (MTA) provides for regulating tenancy terms and conditions and ensuring transparency between the parties. The Act mandates the establishment of a rent authority and rent court in every state and union territory to address grievances and solve disputes.

The move will not only protect tenants in such cases of early eviction  but also help resolve disputes with landlords swiftly.

However, land and urban development are state subjects, and only four states have revised their tenancy laws in line with the new Act.

In July 2022, minister of state for housing and urban affairs (MoHUA), Kaushal Kishore, said in a written reply to a question in the Rajya Sabha, "Per information available with MoHUA, the states of Andhra Pradesh, Tamil Nadu, Uttar Pradesh, and Assam have revised their tenancy acts on the lines of the MTA."

Why are real estate prices rising?

There’s a large immigrant population in Bengaluru, and that has played a major role in the price rise over the last few years.

The large population outflow during the pandemic dented the real estate sector in the city, with prices dropping by 10-15 percent, say experts.

But today, Bengaluru landlords can look forward to recouping lost revenues, because a major reason for soaring real estate prices is a mismatch between demand and supply. Post pandemic, as the returning IT population surged, the demand for real estate and low supply of inventory drove up prices across the board.