The properties owned by Non Resident Indians (NRIs in short) are regulated and governed by the Foreign Exchange Management Act (FEMA). Under the guidelines issued by Reserve Bank of India, NRIs can purchase residential as well as commercial properties in India. RBI does not put restrictions as to the numbers of residential or any commercial property purchased by NRI in India. These properties of NRIs are an easy target for illegal possession as NRIs do not visit India frequently. Thus they fail to take care of their properties and in their absence, their property is encroached upon by illegal occupants. In order to avoid the unwanted situation of illegal encroachments of their properties, NRIs must take care to safeguard the same from any dispute or illegal possession by taking necessary preventive measures.
NRIs buy properties in India as an investment and may be with the goal of returning to India at some point of time. Instead of keeping those properties vacant, renting out is an option that many investors consider. Rents in the major cities have gone up and it does make good economic returns to rent out vacant properties. However, many people feel hesitant from renting their properties as they are worried that tenants may not vacate the premises. While there are no full proof methods of protecting landlords from tenants who refuse to vacate their property after their lease agreements have expired, there are some steps landlords can take to protect their property. Landlords, can protect themselves from undesirable tenants, to some extent by using a leave and license agreement when renting out their property.
There are normally two types of agreements to rent the property:
- Lease Agreement
- Leave and license agreement
While both agreements appear to be similar with the purpose of renting property, there is a considerable difference when legal aspects are taken into consideration. In simple terms, in lease agreements, there is, transfer of interest from a lessor to a lessee. On the other hand a Leave and License agreement does not create any interest in the premises in favor of the licensee. Leave and license agreements offer a higher form of protection for landlords against tenants. Eviction, under leave and license is governed by the Easements Act. NRIs and PIOs who wish to rent out their properties should consider using a Leave and License agreement.
According to the Indian laws applicable to rent agreements, the rights of a landlord in India permit the landlords to evict their tenants provided there is a legitimate and justified reason for such an action. Many Indian states have declared the lawful basis of eviction for tenants in India. Furthermore, the laws relating to the Rent & Tenancy varies from State to State and every State in India has their own laws with respect to Rental & Tenancy of properties.
It is often easy to find a tenant in India and this is one of the most convenient ways for the Non Resident Indians (NRIs) to get handsome returns on their investments in properties. Nevertheless, renting out a property in India while the owner lives abroad, comes with its own set of challenges and threats. Eviction of a troublesome encroacher or tenant, who has illegally taken over your Indian property or is not paying the rent, can be a nightmare for Non Resident Indian (NRI) landlords. Landlords take a number of precautions to avoid getting into such situations and try to be well-acquainted with the rental laws in India along with the rights of the tenants and landlords.
The narrative of landlord-tenant disputes affects NRIs and their real estate investments far more than it does indigenous Indian nationals. Such conflicts with tenants are worse for NRI homes because tenants take unfair advantage of the fact that the owners are not physically present. The majority of NRIs are forced to rent out their homes in order to secure their property from trespassers and unauthorised occupants. Additionally, this guarantees the management and upkeep of assets that would otherwise be in a state of neglect and decay. The landlord-tenant relationship is delicate, though, and should be handled with care.
It is important for the tenants also to understand and realize their responsibility. Although there are tenancy and rent-related laws in all Indian States, conflicts still arise and more so in the case of NRIs who cannot oversee their properties due to their physical absence. Evicting an tenant is a very cumbersome process and is further complicated for NRIs because NRIs must get such an eviction carried out in their absence.
NRI owners of properties in conflict, can neither enjoy the value of these nor exercise proper rental rights. Tenants consistently ignore eviction notices. While Rent laws across India now protect the landlord’s interests much more than earlier and there are some special provisions in certain cases to further protect the assets of NRIs, using these effectively and appropriately is the fiduciary responsibility of the lawyer so engaged by the owner.
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