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License to rent

Friday, December 16, 2016

A member of a co-operative housing society has to go through proper procedures to let out his flat. Ramesh S. Prabhu guides you through the must-dos

Buying a house in Mumbai is a rather arduous task in today’s times. Hence, many prefer to stay on rent. But, here as well there are many rules and regulations to follow to avoid getting into legal trouble.

Registration
A member needs to execute and register the leave and license agreement, which may range from one month to 60 months. Effective from 1st April, 2000, as per section 55 of the Maharashtra Rent Control Act, 1999, every leave and license agreement is required to be registered.

As per article 36A(a) of the Schedule I of the Maharashtra Stamp Act, 1958, with effect from 1st May, 2013, the stamp duty on the leave and license agreement required to be paid is 0.25% of the total sum calculated, which means the total of all licensee fees or rent payable for full duration of license period (maximum of 60 months), including renewal period plus amount of non-refundable deposit or advance or premium plus interest calculated at 10% per annum on refundable security deposit.

Police verification
After registration, the member needs to give the details of the tenants to the nearest police station. Before the tenants occupy the flat, the society should be informed by the member about the flat having been given on rent with a copy of the rent agreement as well as the copy of the information submitted to the police station about the details of the tenants.

If the licensee does not vacate the premises, the owner may apply to Competent Authority under the Maharashtra Rent Control Act, 1999, having office at MHADA Building , Bandra (East), Mumbai- 400 051. Normally, the competent authority hears the parties and the tenant can be vacated within 6 months of filing the application. The owner also can demand two times of the rent as the additional compensation or penalty for not vacating the premises after the notice for termination is issued or after the expiry of the term of the agreement. The application for vacating the rental premises can be filed before the competent authority only, if the agreement is registered and the proper stamp duty is paid.

Be a 'part' of society
It is in the interest of the flat owner to furnish the application for nominal membership of the proposed sub-lettee, licensee or care-taker. His application must contain an undertaking that he shall be joining the society as a party to proceedings to initiate necessary legal proceedings against licensee or caretaker on his failure to get vacant possession of the flat or part thereof on expiry of period of leave and license. Such a member shall pay non-occupancy charges to the society. Non-occupancy charges shall be charged in accordance with the circular issued by the government of Maharashtra under section 79A of the Maharashtra Cooperative Societies Act, 1960. The non-occupancy charges shall be as per the decision taken in the general body meeting, which should not exceed 10% of the service charges excluding the municipal taxes.

There are many circumstances under which a member gives his premises on rent. When a member is required to go out of the area of operation of the society for a long duration on account of exigencies of service or business or on account of prolonged illness or when a member is unable to occupy the flat owing to absence of facilities for education of his children or is unable to secure admission to the school in the locality for them or where the employer is of the view that to ensure efficiency of his duties, he requires him to stay in the accommodation allotted to him by his employer.

If a member of a co-operative housing society intends to give his flat on leave and license basis, as per the New Model Bye-laws of Cooperative Housing Societies, as approved by the Cooperative commissioner in the year 2014, he or she need not take prior permission from the society.

(Ramesh S. Prabhu is Chairman, Maharashtra Societies Welfare Association)

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