Owner asking you to pay exorbitant rent-advance? It's illegal and here is what you need to know

news

Exorbitant security deposits while taking a house on rent is a problem that tenants face across the country, the situation graver in tier-I cities like Bengaluru and Chennai. In a relief to tenants, a XIII small causes court in Chennai in a recent order cited a 1996 Supreme Court verdict which said that a landlord is entitled to only one month's rent in advance. "The Supreme Court in K. Narasimha Rao vs T.S. Nasimuddin Ahmed 1996, held that the landlord is entitled to receive only one month agreed rent by way of advance and any amount paid in excess of agreed rent of one month by way of advance shall be refunded by landlord to tenant or adjusted towards rent," the small causes court pointed out. This essentially means that the existing law of the land is that tenants are required to pay only one month's rent in advance and taking more than it is illegal. But there still remains a lot of confusion over the scope of the law and how it can be used. The News Minute spoke to a legal expert about the order and its implications. Here is what you need to know. Is the order applicable only in Chennai? The small causes court was in Chennai, so technically, the order of the small causes court is applicable only in Chennai. However, its order was based on a Supreme Court order. Thus, because of the the SC order, the rule of one-month advance only is applicable across India. What action can be taken if the landlord demands more than one-month's rent in advance? Action can only be taken against the landlord if a transaction of advance in excess of one-month's rent has been made to the former. A mere demand does not become an offence in civil cases. If the prospective tenant cannot comply with the demand, he or she only has an option of turning down the offer. What this means is that the rampant practice cannot be changed over night, tenants need to be more aware of their rights and take a stand. In cases, where an advance of more than one-month's rent has already been paid to the landlord, and if the tenant wishes to file a complaint, he or she can file a Rent Control Original Petition (RCOP) in a small causes court. Such complaints fall under civil cases category. Can the Supreme Court order be challenged? The SC decision can be challenged by filing a review petition. But till it is not challenged, it will apply to the entire country. Also it is not easy to overturn a SC verdict. If it is a 1996 order, why isn't it followed in several parts of the country? The problem is in the enforcement of the order. Unlike in criminal cases where the police can also take action, in civil cases the affected person needs to initiate the complaint. And many are reluctant to take that step since civil cases can drag on for a long period of time. Though the SC order has been hailed by tenants largely, it has found criticism amongst landlords. The argument being a month's rent in advance is too less to cover any possible damages that can be caused by the tenant, including to the house or in cases where a tenant leaves the house without settling arrears like electricity bills. Tenants would prefer not to rent houses if they are forced to take too low an advance on rent, which acts as security deposit and is seen by many as a logical demand. What is needed is a rational debate on the issue and a solution which is practical, implementable and fair to landlords and tenants. While a month's rent as advance is considered too low, 10-months advance is also extremely high. A nominal amount can be settled upon and the provision needs to included in the Rent Control Act. The rules must be in tune with the time we are living in.

Show us some love! Support our journalism by becoming a TNM Member - Click here.