Can a tenant defer rent payment?

In India, a landlord-tenant relationship is governed by the Model Tenancy Act and various state-specific tenancy laws. Under these laws, the rights and duties of a tenant are clearly defined. Every tenant is required to pay rent, usually on a monthly basis, to the landlord as specified in the rental agreement. Non-payment of rent is considered a violation of the rental agreement terms, which may result in action from the landlord, including penalties and eviction in some cases, if the tenant repeatedly fails to pay the rent. Moreover, landlords typically establish a specific timeline by which tenants are required to pay their rent. However, financial difficulties or job losses often compel tenants to request that landlords defer their rent payment. In this guide, we explore the legal aspects of rent deferment under tenancy laws.

Importance of rental agreement for rent payments

According to the Model Tenancy Act, every tenant and landlord must enter into a written agreement when renting a property. Both parties should discuss and specify terms in the agreement pertaining to the tenancy period, rent amount, payment schedule, penalties for non-payment, and eviction terms, among other terms. Moreover, the agreement should be registered if the tenure is for one year or above. 

The following points highlight the significance of a rental agreement. 

Right to occupy the property: The rental agreement formalises the tenancy and the timely rent payment, as mentioned in the document, giving the tenant a legal right to occupy the property for the specified tenure. 

Proof of payment: The rental agreement and the rent receipts received by the tenant from the landlord usually serve as proof of rent paid. These documents, including a registered rental agreement, enable the tenant to claim tax benefits, such as the House Rent Allowance (HRA). 

Defines maintenance responsibilities: Apart from specifying terms related to monthly rent, a rental agreement also outlines who is responsible for maintenance expenses, utility bill payments, and late payment charges. This reduces the chances of confusion and potential conflicts between landlord and tenant.

Legal proof in case of disputes: The rent agreement serves as legal proof in the event of any dispute arising between the landlord and tenant, due to non-payment of rent or other contract violations. The landlord can use legal measures to take action against the tenant, including eviction. 

Safeguard against wrongful eviction: Rent agreements protect tenants against unfair eviction. Landlords have right to evict tenants only based on valid reasons such as non-payment of rent for two or more consecutive months.

Protection against unfair rent increases: Having a rental agreement provides tenants with protection against arbitrary rent increases by landlords. The rent amount remains fixed or increases at the rate specified in the agreement. However, the rent may be increased at the time of renewal, where the landlord should discuss and mention the percentage and frequency of rent hike.

What do tenancy laws say about rent deferment in India?

In India, there is no specific provision under any of the tenancy laws that provide tenants the right to defer their rent payment. The deferment of rent is generally based on mutual agreement between the tenant and the landlord. Tenants can discuss their situation with the landlord and negotiate the terms to arrive at a mutually agreeable solution, such as a deferred payment or a temporary arrangement like partial rent payment until their situation is resolved. 

Scenarios where tenants can defer payment 

It is common for tenants to consider deferring their rent payment. Some of the scenarios when tenants defer rent payments include: 

• Financial difficulties: Difficult financial situations can compel tenants to request a temporary deferment or partial payment of rent from their landlords. Tenants can discuss their situation with landlords to reach a mutual understanding. 
• Unforeseen situations: Events such as the pandemic led many tenants to face uncertain situations, making rent payment challenging. In such scenarios, even landlords are mostly considerate and allow some relaxation. 
• Landlord’s unavailability: Occasionally, due to the landlord’s personal circumstances, rent payments can be postponed with the mutual agreement of both parties.  
• Failure to undertake repairs: If the landlord neglects the regular repair and maintenance of the property, tenants are usually allowed to perform these repairs and deduct the cost from the rent. While this does not imply rent deferment, it gives some financial cushion to tenants.

Consequences of withholding rent 

Tenants are not entitled by law to defer their rent payments. If the rental agreement requires them to pay rent monthly, they must adhere to this requirement. Withholding rent without due legal procedure is considered a serious violation of the rental agreement and may invite legal consequences, including eviction. Typically, landlords may allow a grace period and consider waiting for around 10 to 30 days after the rent payment due date before initiating action against the tenant. 

A landlord must follow the legal process, involving: 

• Sending polite reminders through calls, SMS or emails
• Sending a formal and documented warning notice 
• Sending a legal notice through registered post
• Initiate a formal legal process by filing a case in court

What can tenants do in place of deferred rent payment?

• Rent reduction: Instead of deferring the full rent, tenants may consider negotiating a temporary rent reduction with their landlords. It can work for the benefit of both parties. 
• Instalment plan: Depending on their personal situation, tenants may also discuss an instalment plan for paying their rent. 
• Adjusting the security deposit: If the tenant wants to defer rent payment for a month or two, they can request that the landlord adjust the amount from their security deposit. 
• Personal loan: If the tenant’s financial health is good and the non-payment of rent is due to personal factors, then opting for a personal loan can be a solution to meet the immediate financial needs.

Housing.com News Viewpoint

While tenants do not have any provision under the tenancy laws to defer rent payment. At the same time, there is no such law that prohibits them from negotiating with landlords and seeking relief when facing personal challenges. Maintaining transparency is a key to protect the tenancy. An effective way to handle the situation is to communicate clearly with the landlord and inform them in advance.  Waiting until the rent is due can lead to confusion and misunderstandings. It is also crucial to document all communication relating to rent payment to prevent disputes.

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