Ramesh Iyer (IT) 25 October 2012

Settlement between lessor and lessee during handover of hous

Dear Members,

I would like to know the procedure of handover of house taken on leave & license agreement by a tenant in Mumbai. I understand that the house owner (lessor) inspects the house on the day the tenant wishes to vacate (or last day of lease), and on his/her satisfaction settles dues, if any (like electricity charges, gas consumption charges in case of piped gas connection, etc.), and then hands over the security deposit by cheque to the tenant, and takes physical possession of the house from the tenant (hands over keys to owner).

I had a query on the above procedure. If the L&L Agreement was not registered (and even if it was), what complications may arise if the deposit cheque refunded by the owner to the tenant bounces, as the tenant would present the cheque at the Bank well AFTER having handed over possession of the house to the owner ? Is it a safe or acceptable option for the tenant to vacate only after realization of the security deposit cheque ?

Request knowledgeable members to advise as appropriate. Thank you.

Regards,

Ramesh

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2 Replies

Lajpat rai thakral (GOVT JOB) 26 October 2012

In my view, cheque should be represented. In case of bounce back, land lord shouldbe contacted for payment. in case he refuses then legal recourse available under negotiable instrument act should be availed.

In my vie we should reject the cheque at first instance as initially tenant must have also given cheque for advance.

second alternative, if the financial circumstances of the land lord were known then tenant should have request for cash or dd.

Ramesh Iyer (IT) 26 October 2012

Mr. Thakral, thank you for your response to my initial query. I believe cheque bouncing is a criminal offense, as it is the duty of the cheque issuer to ensure that his a/c has sufficient funds to honour the cheque when presented by the receiver.

As you rightly stated, the tenant also pays the landlord the security deposit vide cheque and PDCs towards rent for each of the 11 months of lease. So, the relationship between the landlord and the tenant is of mutual trust and faith.

There may be no apparent indication from the landlord about his weak financial condition, which may alert the tenant to request / demand the deposit through DD / cash while handing over possession of the house at the end of the term as per the L&L Agreement signed by both parties. But, I believe it makes the tenant vulnerable to being duped, while handover of house to owner, with a cheque which may not be worth the paper it is printed on.

My actual query is, what recourse does the tenant have when the deposit cheque bounces, as he / she would have already given up possession of the house (as is the 'normal' practice, I understand from informal sources). This is in the light of the fact that the L&L Agreement isn't registered (by mutual consent) which makes the Agreement untenable in law. Though such an Agreement carries great risk for the owner too (what if the tenant doesn' vacate the house ?), once the house is indeed vacated by the tenant, it's the tenant who will end up running from pillar to post for getting her / his deposit amount back from the owner.

Will be grateful if somebody can give a proper clarification on my initial query. Thank you.